##### Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)



| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended March 31, 2014.

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from             
to            .

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Date of event requiring this shell company report

Commission file number: 001-34988

SKY-MOBI LIMITED

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrants name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

10/F, Building B, United Mansion

No. 2 Zijinghua Road, Hangzhou

Zhejiang 310013

Peoples Republic of China

(Address of principal executive offices)

John Bi, Chief Financial
Officer

Tel: +(86) 571-8777-0978

E-mail: ir@sky-mobi.com

Facsimile number: +(86) 571-8775-8616

10/F, Building B, United Mansion

No. 2, Zijinghua Road, Hangzhou

Zhejiang 310013

Peoples Republic of China

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)





Securities
registered or to be registered pursuant to Section 12(b) of the Act.





|                                                                                                    |  |                                          
|--------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of Each Class                                                                                 |  | Name of Each Exchange on Which
Registered
|                                                                                                    | 
|American Depositary Shares, each representing eight
common shares of par value US$0.00005 per share |  | NASDAQ Global Market                     



Securities registered or to be
registered pursuant to Section 12(g) of the Act.

NONE

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

NONE

(Title of Class)





Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:

239,461,886 common shares of par value US$0.00005 per share, as of March 31, 2014.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.     ̈  Yes    x  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.     ̈  Yes    x  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    x  Yes     ̈  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).     ̈  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):

 ̈  Large accelerated
filer             ̈  Accelerated filer            x  Non-accelerated filer

Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:



| |  ̈ | U.S. GAAP
| | - | ---------



| | x | International Financial Reporting Standards as issued by the International Accounting Standards Board
| | - | -----------------------------------------------------------------------------------------------------



| |  ̈ | Other
| | - | -----

If Other has been checked in
response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.     ̈  Item 17     ̈  Item 18

If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).     ̈  Yes    x  No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.     ̈  Yes     ̈  No



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##### Table of Contents

TABLE OF CONTENTS



|                                       |  |           |     |                                                                              |  |  |     | 
|-------------------------------------- |  | --------- | --- | ---------------------------------------------------------------------------- |  |  | --- | 
|CONVENTIONS USED IN THIS ANNUAL REPORT |  |           | 1   |                                                                             
|                                       | 
|PART I                                 |  |           | 2   |                                                                             
|                                       |  |           |    
|                                       |  | ITEM 1.   |     | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |  |  | 2   | 
|                                       |  | ITEM 2.   |     | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  |  | 2   | 
|                                       |  | ITEM 3.   |     | KEY INFORMATION                                                              |  |  | 2   | 
|                                       |  | ITEM 4.   |     | INFORMATION ON THE COMPANY                                                   |  |  | 32  | 
|                                       |  | ITEM 4A.  |     | UNRESOLVED STAFF COMMENTS                                                    |  |  | 55  | 
|                                       |  | ITEM 5.   |     | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  |  | 55  | 
|                                       |  | ITEM 6.   |     | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  |  | 75  | 
|                                       |  | ITEM 7.   |     | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  |  | 82  | 
|                                       |  | ITEM 8.   |     | FINANCIAL INFORMATION                                                        |  |  | 84  | 
|                                       |  | ITEM 9.   |     | THE OFFER AND LISTING                                                        |  |  | 86  | 
|                                       |  | ITEM 10.  |     | ADDITIONAL INFORMATION                                                       |  |  | 86  | 
|                                       |  | ITEM 11.  |     | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  |  | 98  | 
|                                       |  | ITEM 12.  |     | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  |  | 99  | 
|                                       | 
|PART II                                |  |           | 102 |                                                                             
|                                       |  |           |    
|                                       |  | ITEM 13.  |     | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  |  | 102 | 
|                                       |  | ITEM 14.  |     | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  |  | 102 | 
|                                       |  | ITEM 15.  |     | CONTROLS AND PROCEDURES                                                      |  |  | 102 | 
|                                       |  | ITEM 16A. |     | AUDIT COMMITTEE FINANCIAL EXPERT                                             |  |  | 103 | 
|                                       |  | ITEM 16B. |     | CODE OF ETHICS                                                               |  |  | 103 | 
|                                       |  | ITEM 16C. |     | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       |  |  | 103 | 
|                                       |  | ITEM 16D. |     | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   |  |  | 104 | 
|                                       |  | ITEM 16E. |     | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       |  |  | 104 | 
|                                       |  | ITEM 16F. |     | CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT                                 |  |  | 104 | 
|                                       |  | ITEM 16G. |     | CORPORATE GOVERNANCE                                                         |  |  | 104 | 
|                                       |  | ITEM 16H. |     | MINE SAFETY DISCLOSURE                                                       |  |  | 105 | 
|                                       | 
|PART III                               |  |           | 106 |                                                                             
|                                       |  |           |    
|                                       |  | ITEM 17.  |     | FINANCIAL STATEMENTS                                                         |  |  | 106 | 
|                                       |  | ITEM 18.  |     | FINANCIAL STATEMENTS                                                         |  |  | 106 | 
|                                       |  | ITEM 19.  |     | EXHIBITS                                                                     |  |  | 106 | 



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##### Table of Contents

CONVENTIONS USED IN THIS ANNUAL REPORT

In this annual report, unless otherwise indicated, (1) we, us, our company, our or
Sky-mobi refers to Sky-mobi Limited, a Cayman Islands company, its predecessor entities, subsidiaries and consolidated special purpose entities, or SPEs, controlled by Sky-mobi Limited; (2) SPEs refers to Hangzhou Sky
Network Technologies Co., Ltd., or Hangzhou Sky, Hangzhou Mijia Technologies Co., Ltd., or Mijia, Hangzhou Fanyi Technologies Co., Ltd., or Fanyi, Hangzhou Feineng Technologies Co., Ltd., or Feineng, Hangzhou Miyi Technologies Co., Ltd., or Miyi,
Hangzhou Najia Technologies Co., Ltd., or Najia, Shanghai Tianchu Technologies Co., Ltd., or Tianchu, Hangzhou Kaimi Technologies Co., Ltd. or Kaimi, Hangzhou Dangyi Technologies Co., Ltd. or Dangyi, Nanjing Zunqi Network Information Technologies
Co., Ltd. or Zunqi, Nanjing Geyuan Information Technologies Co., Ltd. or Geyuan, Shanghai Mugu Business Information Consulting Co., Ltd, or Mugu, Shenzhen Feidong Network Technologies Co., Ltd., or Feidong, Chengdu Weipin Technologies Co., Ltd., or
Weipin, and Hangzhou Sky Investment Co., Ltd., or Sky Investment; (3) China or PRC refers to the Peoples Republic of China, excluding Taiwan, Hong Kong and Macau; (4) shares or common
shares refers to our common shares, par value US$0.00005 per share; ADSs refers to our American depositary shares, each of which represents eight common shares; and ADRs refers to the American depositary receipts which
evidence our ADSs; (5) all references to RMB or Renminbi are to the legal currency of China; and all references to $, US$ and U.S. dollars are to the legal currency of the United
States; (6) all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding; and (7) all translations from RMB to U.S. dollars and from U.S. dollars to RMB in
this annual report were made at a rate of RMB6.2164 to US$1.00, the noon buying rate in effect as of March 31, 2014, as set forth in the H.10 statistical release of the Federal Reserve Board. The translation is not intended to imply that the
RMB amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on March 31, 2014, or at any other rate.

Maopao platform or Maopao platform products refers to, collectively, our Maopao products and services, including but not limited to Maopao App Store, Maopao Game Center, Maopao
Community and Maopao Browser.

The number of downloads of applications and content titles on Maopao platform refers to the
number of requests made by our users for downloading a particular application or a content title, or for authorization to access specific features of a particular application or a content title from Maopao platform. Multiple download requests may be
made by a user for an application depending on the complexity of the application and whether interruptions occurred during the downloading process.

When calculating the number of Maopao platform users, we count a handset with a particular SIM card to access Maopao platform as one user. Therefore, an individual who accesses Maopao platform through one
handset with two SIM cards will be counted as two users, while an individual who accesses Maopao platform through two handsets using the same SIM card will also be counted as two users.

The number of active Maopao Community members refers to the number of registered members who logged on to the Maopao Community at least
twice a month for the relevant period.

Fiscal 2012, fiscal 2013 and fiscal 2014
represent the fiscal years ended March 31, 2012, 2013 and 2014, respectively.

This annual report on Form 20-F includes
our audited consolidated statements of operations for the fiscal years ended March 31, 2012, 2013 and 2014, and consolidated balance sheet data as of March 31, 2012, 2013 and 2014.

On December 15, 2010, we completed the initial public offering of 6,125,000 ADSs, each representing eight common shares of par
value US$0.00005 per share. On December 10, 2010, we listed our ADSs on the NASDAQ Global Market, or NASDAQ, under the ticker symbol MOBI.



1



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##### Table of Contents

PART I



|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|------- | -----------------------------------------------------

Not Applicable.



|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------

Not Applicable.



|ITEM 3. | KEY INFORMATION
|------- | ---------------



| | A. | Selected Financial Data
| | -- | -----------------------

We have derived our selected consolidated statement of profit or loss and other comprehensive income data for the fiscal years ended
March 31, 2012, 2013 and 2014 and the selected consolidated statement of financial position data as of March 31, 2012, 2013 and 2014 from our audited consolidated financial statements included in this annual report. Our selected
consolidated statement of profit or loss and other comprehensive income data for the fiscal years ended March 31, 2010 and 2011 and the selected consolidated statement of financial position data as of March 31, 2010 and 2011 have been
derived from our audited consolidated financial statements not included in this annual report. Our consolidated financial statements are prepared and presented in accordance with International Financial Reporting Standards, or IFRS, as issued by the
International Accounting Standards Board, or IASB.

You should read the selected consolidated financial data set forth below
in conjunction with the related notes and Item 5. Operating and Financial Review and Prospects.



|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|------------------------------------------------------------------------------- |  | ---------------------------------------------------------- | -------- | - | ---- |  | -------- | ---- |  |  | -------- | - |  | ---- | -------- | - | --- |  | -------- | - |  |  | ------- | -
|                                                                                |  | For the Fiscal Year Ended March 31,                        |         
|                                                                                |  | 2010                                                       |          |   | 2011 |  |          | 2012 |  |  | 2013     |   |  | 2014 |         
|                                                                                |  | RMB                                                        |          |   | RMB  |  |          | RMB  |  |  | RMB      |   |  | RMB  |          |   | US$ | 
|                                                                                |  | (in thousands, except number of shares and per share data) |         
|Consolidated Statements of Profit or Loss and Other Comprehensive Income Data   |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Revenues                                                                        |  |                                                            | 544,258  |   |      |  | 675,294  |      |  |  | 685,563  |   |  |      | 601,107  |   |     |  | 485,551  |   |  |  | 78,108  |  
|Cost of revenues from third parties                                             |  |                                                            | (353,106 | ) |      |  | (461,422 | )    |  |  | (465,479 | ) |  |      | (412,246 | ) |     |  | (339,982 | ) |  |  | (54,691 | )
|Cost of revenues from related parties                                           |  |                                                            | (1,245   | ) |      |  | (3,415   | )    |  |  | (5,546   | ) |  |      | (6,534   | ) |     |  | (24,453  | ) |  |  | (3,934  | )
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Gross profit                                                                    |  |                                                            | 189,907  |   |      |  | 210,457  |      |  |  | 214,538  |   |  |      | 182,327  |   |     |  | 121,116  |   |  |  | 19,483  |  
|Operating expenses(1):                                                          |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Research and development expenses                                               |  |                                                            | (26,900  | ) |      |  | (52,260  | )    |  |  | (71,088  | ) |  |      | (73,027  | ) |     |  | (38,644  | ) |  |  | (6,216  | )
|Sales and marketing expenses                                                    |  |                                                            | (21,511  | ) |      |  | (38,200  | )    |  |  | (37,361  | ) |  |      | (35,369  | ) |     |  | (36,351  | ) |  |  | (5,848  | )
|General and administration expenses                                             |  |                                                            | (17,507  | ) |      |  | (98,938  | )    |  |  | (83,996  | ) |  |      | (69,491  | ) |     |  | (58,401  | ) |  |  | (9,395  | )
|Other operating income, net                                                     |  |                                                            |         |   |      |  |         |      |  |  | 3,675    |   |  |      | 2,320    |   |     |  | 5,772    |   |  |  | 929     |  
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Profit (Loss) from operations                                                   |  |                                                            | 123,989  |   |      |  | 21,059   |      |  |  | 25,768   |   |  |      | 6,760    |   |     |  | (6,508   | ) |  |  | (1,047  | )
|Other gains and losses                                                          |  |                                                            | 3,531    |   |      |  | 11,179   |      |  |  | 11,649   |   |  |      | 15,531   |   |     |  | 17,482   |   |  |  | 2,812   |  
|Impairment of investment in an associate                                        |  |                                                            |         |   |      |  | (5,760   | )    |  |  |         |   |  |      | (1,367   | ) |     |  | (727     | ) |  |  | (117    | )
|Impairment of an available-for-sale investment                                  |  |                                                            |         |   |      |  |         |      |  |  |         |   |  |      |         |   |     |  | (800     | ) |  |  | (129    | )
|Finance costs                                                                   |  |                                                            | (5,417   | ) |      |  | (4,333   | )    |  |  |         |   |  |      |         |   |     |  |         |   |  |  |        |  
|Share of results of associates                                                  |  |                                                            | (1,255   | ) |      |  | (6,012   | )    |  |  | (886     | ) |  |      | (935     | ) |     |  | 2,428    |   |  |  | 391     |  
|(Loss) gain on changes in fair value of convertible redeemable preferred shares |  |                                                            | (290,135 | ) |      |  | 106,684  |      |  |  |         |   |  |      |         |   |     |  |         |   |  |  |        |  
|(Loss) gain on changes in fair value of warrants                                |  |                                                            | (7,548   | ) |      |  | 7,377    |      |  |  |         |   |  |      |         |   |     |  |         |   |  |  |        |  
|Loss on modification of convertible redeemable preferred shares                 |  |                                                            | (44,439  | ) |      |  |         |      |  |  |         |   |  |      |         |   |     |  |         |   |  |  |        |  
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|(Loss) profit before tax                                                        |  |                                                            | (221,274 | ) |      |  | 130,194  |      |  |  | 36,531   |   |  |      | 19,989   |   |     |  | 11,875   |   |  |  | 1,910   |  
|Income tax (expense) benefit                                                    |  |                                                            | (8,528   | ) |      |  | 5,367    |      |  |  | (3,602   | ) |  |      | (2,733   | ) |     |  | (7,218   | ) |  |  | (1,161  | )
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|(Loss) profit for the year                                                      |  |                                                            | (229,802 | ) |      |  | 135,561  |      |  |  | 32,929   |   |  |      | 17,256   |   |     |  | 4,657    |   |  |  | 749     |  
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Loss (profit) and total comprehensive (loss) income for the year                |  |                                                            | (229,802 | ) |      |  | 135,561  |      |  |  | 32,929   |   |  |      | 17,256   |   |     |  | 4,657    |   |  |  | 749     |  
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|(Loss) profit and total comprehensive (loss) income attributable to:            |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Owners of the Company                                                           |  |                                                            | (229,802 | ) |      |  | 136,310  |      |  |  | 32,969   |   |  |      | 17,112   |   |     |  | 5,251    |   |  |  | 845     |  
|Non-controlling interests                                                       |  |                                                            |         |   |      |  | (749     | )    |  |  | (40      | ) |  |      | 144      |   |     |  | (594     | ) |  |  | (96     | )
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|                                                                                |  |                                                            | (229,802 | ) |      |  | 135,561  |      |  |  | 32,929   |   |  |      | 17,256   |   |     |  | 4,657    |   |  |  | 749     |  
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|(Loss) earnings per share:                                                      |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Basic                                                                           |  |                                                            | (1.53    | ) |      |  | 0.74     |      |  |  | 0.13     |   |  |      | 0.07     |   |     |  | 0.02     |   |  |  | 0.00    |  
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Diluted                                                                         |  |                                                            | (1.53    | ) |      |  | 0.06     |      |  |  | 0.13     |   |  |      | 0.07     |   |     |  | 0.02     |   |  |  | 0.00    |  
|                                                                                |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|(Loss) earnings per ADS(2):                                                     |  |                                                            |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |         |  
|Basic                                                                           |  |                                                            | (12.24   | ) |      |  | 5.92     |      |  |  | 1.01     |   |  |      | 0.53     |   |     |  | 0.17     |   |  |  | 0.03    |  
|Diluted                                                                         |  |                                                            | (12.24   | ) |      |  | 0.48     |      |  |  | 1.00     |   |  |      | 0.53     |   |     |  | 0.17     |   |  |  | 0.03    |  



|(1) | Includes share-based compensation expenses as follows:
|--- | ------------------------------------------------------



2



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|                                        |  |                              |       |  |      |  |        |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |       | 
|--------------------------------------- |  | ---------------------------- | ----- |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  | --- |  | ------ |  |  |  | ----- | 
|                                        |  | For the Year Ended March 31, |      
|                                        |  | 2010                         |       |  | 2011 |  |        | 2012 |  |  | 2013   |  |  | 2014 |       
|Share-Based Compensation Data           |  | RMB                          |       |  | RMB  |  |        | RMB  |  |  | RMB    |  |  | RMB  |        |  | US$ | 
|                                        |  | (in thousands)               |      
|Research and development expenses       |  |                              | 539   |  |      |  | 9,528  |      |  |  | 8,536  |  |  |      | 5,900  |  |     |  | 4,338  |  |  |  | 698   | 
|Sales and marketing expenses            |  |                              | 576   |  |      |  | 4,738  |      |  |  | 3,552  |  |  |      | 2,067  |  |     |  | 3,613  |  |  |  | 581   | 
|General and administration expenses     |  |                              | 2,348 |  |      |  | 33,368 |      |  |  | 30,656 |  |  |      | 14,017 |  |     |  | 8,691  |  |  |  | 1,399 | 
|                                        |  |                              |       |  |      |  |        |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |       | 
|Total share-based compensation expenses |  |                              | 3,463 |  |      |  | 47,634 |      |  |  | 42,744 |  |  |      | 21,984 |  |     |  | 16,642 |  |  |  | 2,678 | 
|                                        |  |                              |       |  |      |  |        |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |       | 



|(2) | Each ADS represents eight common shares.
|--- | ----------------------------------------

The following table sets forth the reconciliation of non-IFRS net profit for the year, a non-IFRS financial measure, from loss or profit for the year, our most directly comparable financial measure
presented in accordance with IFRS, for the periods indicated.



|                                                                                                                        |  |                                     |          |   |      |  |          |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |       | 
|----------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | -------- | - | ---- |  | -------- | ---- |  |  | ------ |  |  | ---- | ------ |  | --- |  | ------ |  |  |  | ----- | 
|                                                                                                                        |  | For the Fiscal Year Ended March 31, |         
|                                                                                                                        |  | 2010                                |          |   | 2011 |  |          | 2012 |  |  | 2013   |  |  | 2014 |       
|                                                                                                                        |  | RMB                                 |          |   | RMB  |  |          | RMB  |  |  | RMB    |  |  | RMB  |        |  | US$ | 
|                                                                                                                        |  | (in thousands)                      |         
|Non-IFRS Financial Data                                                                                                 |  |                                     |          |   |      |  |          |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |       | 
|IFRS (loss) profit for the period                                                                                       |  |                                     | (229,802 | ) |      |  | 135,561  |      |  |  | 32,929 |  |  |      | 17,256 |  |     |  | 4,657  |  |  |  | 749   | 
|Share-based compensation charges                                                                                        |  |                                     | 3,606    |   |      |  | 50,290   |      |  |  | 45,683 |  |  |      | 24,457 |  |     |  | 17,478 |  |  |  | 2,812 | 
|Initial public offering expenses charged into current expenses                                                          |  |                                     |         |   |      |  | 3,659    |      |  |  |       |  |  |      |       |  |     |  |       |  |  |  |      | 
|Loss (gain) on changes in fair value of warrants                                                                        |  |                                     | 7,548    |   |      |  | (7,377   | )    |  |  |       |  |  |      |       |  |     |  |       |  |  |  |      | 
|Loss (gain) on changes in fair value of convertible redeemable preferred shares                                         |  |                                     | 290,135  |   |      |  | (106,684 | )    |  |  |       |  |  |      |       |  |     |  |       |  |  |  |      | 
|Loss on modification of convertible redeemable preferred shares                                                         |  |                                     | 44,439   |   |      |  |         |      |  |  |       |  |  |      |       |  |     |  |       |  |  |  |      | 
|Foreign exchange gain relating to gain on changes in fair value of convertible redeemable preferred shares and
warrants |  |                                     | (256     | ) |      |  | (12,240  | )    |  |  |       |  |  |      |       |  |     |  |       |  |  |  |      | 
|Reversal of withholding tax on shareholding dividend(1)                                                                 |  |                                     |         |   |      |  | (8,305   | )    |  |  |       |  |  |      |       |  |     |  |       |  |  |  |      | 
|                                                                                                                        |  |                                     |          |   |      |  |          |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |       | 
|                                                                                                                        |  |                                     |          |   |      | 
|Non-IFRS net profit for the period(2)                                                                                   |  |                                     | 115,670  |   |      |  | 54,904   |      |  |  | 78,612 |  |  |      | 41,713 |  |     |  | 22,135 |  |  |  | 3,561 | 
|                                                                                                                        |  |                                     |          |   |      |  |          |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |       | 



|(1) | Reversal of withholding tax on shareholding dividend represents the reversal of the accrued withholding tax related to the dividend to preferred shareholders.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | We define non-IFRS net profit for the period, a non-IFRS financial measure, as profit (loss) for the period excluding share-based compensation charges, loss from
initial public offering expenses charged into current expenses, loss (gain) on changes in the fair value of convertible redeemable preferred shares and warrants, loss on the modification of convertible redeemable preferred shares and the foreign
exchange gain relating thereto, and the reversal of withholding tax on shareholding dividends. We review non-IFRS net profit for the period together with profit (loss) for the period to obtain a better understanding of our operating performance. We
also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation charges, loss from initial public offering expenses charged into current
expenses, loss (gain) on changes in the fair value of convertible redeemable preferred shares and warrants, loss on the modification of convertible redeemable preferred shares and the foreign exchange gain relating thereto, and the reversal of
withholding tax on shareholding dividends. However, the use of non-IFRS net profit for the period has material limitations as an analytical tool. One of the limitations of using non-IFRS net profit for the period is that it does not include all
items that affect our profit (loss) for the period. In addition, because non-IFRS net profit for the period is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies.
In light of the foregoing limitations, you should not consider non-IFRS net profit for the period in isolation from or as an alternative to total profit (loss) or other financial measures prepared in accordance with IFRS.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|                                                                                     |  |                 |          |   |      |  |         |      |  |  |         |  |  |      |         |  |     |  |         |  |  |  |         | 
|------------------------------------------------------------------------------------ |  | --------------- | -------- | - | ---- |  | ------- | ---- |  |  | ------- |  |  | ---- | ------- |  | --- |  | ------- |  |  |  | ------- | 
|                                                                                     |  | As of March 31, |         
|                                                                                     |  | 2010            |          |   | 2011 |  |         | 2012 |  |  | 2013    |  |  | 2014 |        
|                                                                                     |  | RMB             |          |   | RMB  |  |         | RMB  |  |  | RMB     |  |  | RMB  |         |  | US$ | 
|                                                                                     |  | (in thousands)  |         
|Consolidated Statement of Financial Position                                         |  |                 |          |   |      |  |         |      |  |  |         |  |  |      |         |  |     |  |         |  |  |  |         | 
|Cash and cash equivalents                                                            |  |                 | 75,105   |   |      |  | 367,214 |      |  |  | 137,538 |  |  |      | 135,025 |  |     |  | 79,057  |  |  |  | 12,717  | 
|Term deposits                                                                        |  |                 | 50,000   |   |      |  | 152,718 |      |  |  | 438,393 |  |  |      | 473,277 |  |     |  | 295,804 |  |  |  | 47,584  | 
|Short-term investments and investment at fair value through profit or loss (FVTPL) |  |                 |         |   |      |  |        |      |  |  |        |  |  |      |        |  |     |  | 218,642 |  |  |  | 35,172  | 
|Total assets                                                                         |  |                 | 292,491  |   |      |  | 656,543 |      |  |  | 718,751 |  |  |      | 741,140 |  |     |  | 785,653 |  |  |  | 126,383 | 
|Convertible redeemable preferred shares                                              |  |                 | 451,491  |   |      |  |        |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |        | 
|Total liabilities                                                                    |  |                 | 600,003  |   |      |  | 155,003 |      |  |  | 138,516 |  |  |      | 140,022 |  |     |  | 181,724 |  |  |  | 29,234  | 
|Total equity (deficit)                                                               |  |                 | (307,512 | ) |      |  | 501,540 |      |  |  | 580,235 |  |  |      | 601,118 |  |     |  | 603,929 |  |  |  | 96,553  | 
|Total equity and liabilities                                                         |  |                 | 292,491  |   |      |  | 656,543 |      |  |  | 718,751 |  |  |      | 741,140 |  |     |  | 785,653 |  |  |  | 126,383 | 
|Share capital                                                                        |  |                 | 57       |   |      |  | 92      |      |  |  | 92      |  |  |      | 89      |  |     |  | 86      |  |  |  | 12      | 
|Dividends                                                                            |  |                 | 16,250   |   |      |  | 13,000  |      |  |  |        |  |  |      |        |  |     |  |        |  |  |  |        | 

Exchange Rate Information

Our business is primarily conducted in China and almost all of our revenues are denominated in RMB. This annual report contains translations of RMB amounts into U.S. dollars based on the noon buying rate
on March 31, 2014, as set forth in H.10 statistical release of the Federal Reserve Board. For your convenience, this annual report contains translations of some RMB or U.S. dollar amounts for the fiscal year ended March 31, 2014 at
US$1.00: RMB6.2164, which was the noon buying rate in effect as of March 31, 2014. The prevailing rate on July 25, 2013 was US$1.00: RMB6.1913. We make no representation that any RMB or U.S. dollar amounts could have been, or could be,
converted into U.S. dollars or RMB, as the case may be, at any particular rate, the rates stated below, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into
foreign currency and through restrictions on foreign exchange activities.

The following table sets forth information
concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this annual report or will use in the
preparation of our other periodic reports or any other information to be provided to you. The source of these rates is H.10 statistical release of the Federal Reserve Board.



|                                 |  |                  |        |  |            |  |        |     |  |  |        |  |  |  |        | 
|-------------------------------- |  | ---------------- | ------ |  | ---------- |  | ------ | --- |  |  | ------ |  |  |  | ------ | 
|                                 |  | Noon Buying Rate |       
|Period                           |  | Period End       |        |  | Average(1) |  |        | Low |  |  | High   | 
|                                 |  |                  |        | 
|Fiscal Year ended March 31, 2010 |  |                  | 6.8258 |  |            |  | 6.8268 |     |  |  | 6.8371 |  |  |  | 6.8176 | 
|Fiscal Year ended March 31, 2011 |  |                  | 6.5483 |  |            |  | 6.6972 |     |  |  | 6.8323 |  |  |  | 6.5483 | 
|Fiscal Year ended March 31, 2012 |  |                  | 6.2975 |  |            |  | 6.3980 |     |  |  | 6.5477 |  |  |  | 6.2935 | 
|Fiscal Year ended March 31, 2013 |  |                  | 6.2108 |  |            |  | 6.2783 |     |  |  | 6.3684 |  |  |  | 6.2108 | 
|Fiscal Year ended March 31, 2014 |  |                  | 6.2164 |  |            |  | 6.1185 |     |  |  | 6.0402 |  |  |  | 6.2273 | 
|2014                             |  |                  |        |  |            |  |        |     |  |  |        |  |  |  |        | 
|January                          |  |                  | 6.0590 |  |            |  | 6.0509 |     |  |  | 6.0600 |  |  |  | 6.0402 | 
|February                         |  |                  | 6.1448 |  |            |  | 6.0816 |     |  |  | 6.1448 |  |  |  | 6.0591 | 
|March                            |  |                  | 6.2164 |  |            |  | 6.1729 |     |  |  | 6.2273 |  |  |  | 6.1183 | 
|April                            |  |                  | 6.2591 |  |            |  | 6.2246 |     |  |  | 6.2591 |  |  |  | 6.1966 | 
|May                              |  |                  | 6.2471 |  |            |  | 6.2380 |     |  |  | 6.2591 |  |  |  | 6.2255 | 
|June                             |  |                  | 6.2036 |  |            |  | 6.2306 |     |  |  | 6.2548 |  |  |  | 6.2036 | 
|July (through July 25, 2014)     |  |                  | 6.1913 |  |            |  | 6.2030 |     |  |  | 6.2115 |  |  |  | 6.1913 | 



|(1) | Annual averages were calculated by using the average of the exchange rates on the last day of each month during the relevant year. Monthly averages were calculated by
using the average of the daily rates during the relevant month.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | B. | Capitalization and Indebtedness
| | -- | -------------------------------

Not Applicable.



| | C. | Reasons for the Offer and Use of Proceeds
| | -- | -----------------------------------------

Not Applicable.



| | D. | Risk Factors
| | -- | ------------

Risks Related to Our
Business and Our Industry

We have a limited operating history and the long-term potential of our business model is unproven, which makes
it difficult to evaluate our business.

We commenced our business in 2005 and launched Maopao App Store for feature
phones and smartphones in December 2006 and May 2012, respectively. As such, we have a limited operating history for you to evaluate our business, financial performance and prospects, particularly in connection with our smartphone business. Evolved
from our feature phone business, our smartphone business is relatively new in the fast growing mobile application industry in China.

Our revenue has been declining in recent years due to our shift of strategic focus from the feature phone business to the smartphone business, and we may not be able to achieve revenue growth in future
periods. Our business model may become obsolete due to the development of other business models or technologies. It is also difficult to evaluate our prospects because we may not have sufficient experience to address the risks frequently encountered
by early stage companies entering new and rapidly evolving markets, such as the mobile application market in China. In addition, we have since 2012 gradually shifted the strategic focus of our business from feature phones to smartphones by launching
a portfolio of Maopao platform products for smartphones. Although our Maopao platform products for smartphones are rapidly gaining popularity across China, sustainability of user demand and the continued growth of these smartphone products are
subject to uncertainty. If our smartphone business does not grow as expected or at all for any reason, the trading price of our ADSs may decline and the value of your investment may be materially and adversely affected.

We generated net profit in the fiscal years ended March 31, 2012, 2013 and 2014. Our ability to maintain profitability depends on,
among other factors, the growth of the mobile applications industry in China, the continued acceptance of Maopao platform by smartphone users, our ability to provide new applications and other content to meet the changing demands of our users, our
ability to maintain good relationships with industry participants and to control our costs and expenses. We may not be able to sustain profitability on a quarterly or annual basis. Accordingly, you should not rely on our results of operations for
any prior periods as an indication of our future performance.

Significant changes in the policies, guidelines or practices of mobile
network operators or the PRC government with respect to mobile applications and other content may result in lower revenues or additional costs for us and materially adversely affect our business operations, financial condition and results of
operations.

PRC mobile network operators may change their policies, guidelines or business practices which affect
all mobile service providers and companies using their networks. Because we rely on mobile network operators directly or through mobile service providers who in turn utilize mobile network operators billing channels for the collection of a
substantial portion of our sales proceeds, a significant change in mobile network operators policies or guidelines may cause our revenues to decrease or operating costs to increase. Furthermore, our mobile service providers and us are subject
to review by mobile network operators from time to time and may be denied access to mobile network operators billing channels should we or our mobile service providers fail such reviews. As a result, our financial condition and results of
operations may be materially adversely affected by policy or guideline changes by PRC mobile network operators.



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##### Table of Contents

For example, in January 2010, China Mobile, the largest mobile network operator in China,
implemented a series of measures to improve the user experience for mobile handset embedded services. Under these measures, mobile applications and other content embedded in handsets are required to contain additional notices and confirmations to
users during their purchases of in-app virtual items, premium features and other content. In addition, services based on SMS short codes are required to be more tailored to the specific mobile applications and content offerings or service providers.
These measures made it more burdensome for our users to make purchases, causing certain users to decrease or cease purchasing from us. Furthermore, since September 2010, China Mobile has applied a set of measures that require users to send triple
confirmation SMSs before a transaction can be effected. The foregoing developments resulted in increased channel costs and transaction failures and adversely affected our revenues. If the government or mobile network operators impose similar or more
stringent measures, our results of operations may be materially adversely affected.

PRC mobile network operators or the PRC
government could impose additional requirements with respect to the subscription or download of applications and other content offered on Maopao platform, billing notifications or other consumer-protection measures or adopt other policies that may
require significant changes in how we promote and sell the applications and content on Maopao platform, which could materially adversely affect our financial condition and results of operations.

Our failure to maintain cooperative relationships with handset companies to pre-install our applications onto mobile handsets or to cooperate with
additional handset companies would result in a decrease in our market share.

We rely on handset companies to
pre-install our Maopao App Store, Maopao Game Center and other applications onto their mobile phones, which is the primary way we have developed our large user base. We had entered into cooperation agreements with over 250 smartphone and 800 feature
phone handset companies as of March 31, 2014 to pre-install Maopao platform applications on their products. Our agreements with handset companies generally have one- to two-year terms and contain automatic renewal provisions, pursuant to which
we share with them a percentage of revenues generated from user purchases or pay a fixed amount based on number of activations. Due to our reliance on handset companies to pre-install our Maopao platform products on mobile phones, any termination of
or deterioration in our existing relationships with handset companies or our failure to cooperate with additional handset companies, particularly those with a substantial market share or growth potential, would decrease our user base and market
share.

The handset companies we partner with face fierce competition in an industry characterized by evolving technological
standards. Our handset company partners that have traditionally focused on feature phones have experienced market share declines in recent years, which has resulted in a decrease in our revenues. Furthermore, the amount paid to handset companies
under revenue sharing arrangements constitutes a significant portion of our total cost of revenues in recent years. Unfavorable changes to our revenue sharing arrangements with handset companies could adversely affect our results of operations.

Handset companies often pre-install other mobile application stores in addition to Maopao App Store or Maopao Game Center,
which could adversely affect purchases from Maopao App Store or Maopao Game Center, causing our revenues to decrease. In addition, certain handset companies may consider developing their own mobile application store, which could adversely affect our
relationships with them.

Our failure to increase the installed base of Maopao platform among economic handsets would adversely affect
our market share and results of operations.

We primarily collaborate with handset companies to pre-install Maopao
platform products on economic smartphones and feature phones. Our ability to increase the pre-installation of Maopao platform depends on many factors, some of which are beyond our control. Although we work with a large number of economic smartphone
and feature phone manufacturers and brands that in aggregate hold a large market share in China, these handset companies may not be able to maintain their market shares. The mobile phone market in China is rapidly evolving. On the one hand, after
years of high growth in feature phone sales in China, the feature phone market in China has declined since the second half of 2012, causing the market share of certain feature phone manufacturers we partner with to decline. On the other hand,
although we have been increasing our collaboration with smartphone manufacturers in recent years, there is no guarantee that these companies will continue to occupy substantial market share in the future. If the operations of the handset companies
we partner with deteriorate, our business could be materially and adversely affected.

In addition, mobile network
carrier-subsidized handsets, most of which have other mobile application stores pre-installed, historically have had a relatively large market share in China, and their market share in China is continuously growing, which may adversely affect the
pre-installation of Maopao platform products onto handsets, particularly economic handsets. Our failure to increase the installed base of our Maopao App Store and other Maopao platform products among economic handsets would adversely affect our
market share and results of operations.



6



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##### Table of Contents

We may face increased competition, which could reduce our market share and materially adversely affect
our results of operations.

The mobile application market in China is fast evolving and highly competitive. The
market is characterized by the frequent introduction of new products and services, short product life cycles, evolving industry standards, improved performance characteristics, rapid adoption of technological and product advancement, and price
sensitivity on the part of users. We compete primarily with mobile application store operators and mobile game distributors. See Item 4. Information on the Company  A. Business Overview  Competition.

We may also face alliances between our existing and new competitors and emergence of new competitors. Mobile service providers, handset
companies or other industry players may introduce a mobile application store or other business model to compete with us. In addition, some wireless communication chip manufacturers have launched or plan to launch their own application stores.

Some of our competitors have significantly greater financial, technological and marketing resources, stronger relationships
with industry participants and a larger portfolio of applications and content offerings than we do. Some of our competitors, especially major multinational application store operators, have greater development experience and resources than we have.
If new competitors emerge or competition among existing competitors intensifies, we may be forced to provide more favorable revenue sharing arrangements to our business partners, which could adversely affect our profitability. If we fail to compete
effectively, our market share would decrease and our results of operations would suffer.

We depend on mobile service providers, and
ultimately mobile network operators, for the collection of a large portion of our revenues, and any termination of or deterioration in our relationships with mobile service providers, or a disruption in our mobile service providers
relationships with mobile network operators, may result in severe disruptions to our operations.

For the fiscal
years ended March 31, 2012, 2013 and 2014, we collected a large portion of our revenues through mobile service providers, who utilize mobile network operators billing channels pursuant to their agreements with mobile network operators to
provide billing and payment collection services. As of March 31, 2014, we had entered into agreements with over 40 mobile service providers. Our agreements with mobile service providers generally have one- to three-year terms and sometimes
include automatic renewal provisions. We cannot assure you that we could renew these agreements or enter into new ones when the existing agreements expire. Because we rely on mobile service providers to collect a substantial portion of the sales
proceeds from our users, any termination of or deterioration in our relationships with mobile service providers may severely disrupt our operations and materially adversely affect our financial condition and results of operations.

Our mobile service providers rely on mobile network operators billing channels for the provision of payment collection services.
Three mobile network operators, namely China Mobile, China Unicom and China Telecom, dominate the wireless telecommunications sector in China. A substantial portion of our sales proceeds were collected by mobile service companies through billing
channels of China Mobile, who has the largest subscriber base in China. Any disruption or termination of our mobile service providers cooperation with the mobile network operators, particularly China Mobile, could render these billing channels
unavailable, which could materially adversely affect our operations.

If we fail to maintain cooperative relationships with mobile
network operators, our revenues and growth prospects may be adversely affected.

We cooperate with mobile network
operators in various aspects of our business, including the provision of customized software services at their physical stores, distribution and promotion of applications and mobile content and payment collection. As of the date of this annual
report, we have entered into strategic cooperation with China Mobile, China Unicom and China Telecom, the three dominate mobile network operators in China. For example, China Mobile, the largest mobile network operator in China, has granted us
access to their payment channels since 2012, which enables us to collect a portion of our sales proceeds through China Mobile directly from users without using mobile service providers as intermediaries. In March 2012, we entered into a partnership
agreement with China Mobile, pursuant to which we offer its mobile games and mobile reading application on Maopao platform and share a percentage of revenue based on user purchases of China Mobiles in-game virtual items, premium features and
reading content from Maopao platform. In March 2014, we entered into a strategic partnership with the Wo Store of China Unicom, the official application store of Chinas second largest mobile network operator. Under this partnership,
China Unicom designated us as an official business partner to provide customized software services through its extensive network of physical stores. See Item 4. Information on the Company  A. Business Overview  Cooperation with
Mobile Network Operators.

We plan to deepen our cooperation with the mobile network operators to enlarge our user
base, benefit from lower payment channel costs and faster payment collection and supplement our mobile application and content offerings. If we fail to maintain our relationships with any of the mobile network operators, we may not be able to find
replacement operators in a timely manner or at all, and our business and prospects may be adversely affected. Furthermore, mobile network operators monitor our operations and may impose sanctions if we fail to comply with their policies or
guidelines, including denying us access to their billing channels, which could adversely affect our financial condition and results of operations.



7



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##### Table of Contents

We depend on the billing and collection systems of mobile network operators and mobile service
providers. The inaccuracy of these systems or changes in the operations of mobile network operators and mobile service providers could affect our business and results of operations.

We depend on mobile network operators, either directly or through mobile service companies, to maintain accurate records of payments by
users and collect such payments. We receive periodic statements from mobile network operators and mobile service providers that indicate the aggregate amount of fees charged to users for purchases of in-app virtual items, premium features and other
content. While we conduct independent sampling tests to verify information provided to us, our sampling is on a relatively small scale and the inaccuracies identified are usually resolved through negotiations with mobile service providers. Our
business and results of operations could be adversely affected if the mobile network operators or mobile service providers miscalculate our sales proceeds.

We have been collecting a portion of our revenues directly through China Mobiles billing channels since 2012. We depend on China Mobile to maintain accurate records of payments by users and collect
payments. However, China Mobile may change its policies or business practices which could affect our results of operations. For example, in 2012, China Mobile began implementing more stringent billing and collection practices. Under
these measures, if China Mobile detects abnormal data transmissions in billing, the underlying transaction will be considered suspicious and the proceeds associated with such transaction will be written off. China Mobile may implement further
changes to its billing and collection practices in the future, which could materially adversely affect our financial condition and results of operations.

We generally grant our mobile service providers and mobile network operators credit terms ranging from 60 to 90 days. Receivables from our top ten mobile service providers accounted for approximately
38.4% and 21.4% of our total trade receivables as of March 31, 2013 and 2014, respectively. Receivables from the three major mobile network operators accounted for 63.3% of our total trade receivables as of March 31, 2014. Failure to
timely collect our receivables from mobile service providers or mobile network operators may adversely affect our cash flows. Our mobile service providers may from time to time experience cash flow difficulties and consequently delay their payments
to us. Any delay in payment or inability of mobile service providers to pay us may adversely affect our operations and cash flows.

Our
revenues and cost of revenues are affected by billing and transmission failures that are often beyond our control. Failure to accurately record billing and transmission failures in a timely manner could harm the credibility of our system and our
relationships with industry participants.

After a mobile user confirms a purchase of in-app virtual items, premium
features or other content, the mobile service provider sends the user a confirmation SMS with transaction details and a simultaneous message to the mobile network operator, which we refer to as a message original, or MO. We also record such MO data
on Maopao platform. Upon receipt of the MO data, the mobile network operator verifies the execution of a transaction. If the transaction has been effected, the mobile network operator usually receives, from the users mobile phone, a
confirmation message, which we refer to as a message received, or MR. Based on MR data, the mobile network operator records the transaction and bills the user.

The MR data are usually lower than the MO data due to billing and transaction failures, which are caused by various reasons, including:



| |  |  | the mobile network operator experiencing technical problems with its network that prevent the transmission of MR data;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | the delivery of mobile applications and content from Maopao platform to a user being prevented because the users mobile phone is turned off for
an extended period of time, or the users prepaid phone card has run out of value; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we experiencing technical problems with Maopao platform that prevent the delivery of our applications and content.
| | - |  | ------------------------------------------------------------------------------------------------------------------

As a result of these billing and transaction failures, in the fiscal year ended March 31, 2014, the monthly MR amounts we received
from mobile network operators were approximately 10% to 20% lower than the monthly MO amounts recorded on Maopao platform.

We recognize our revenues based on MR data. In line with industry practice, we make payments to content providers and handset companies
based on our MO data rather than MR data, because MR data generally does not contain sufficient information to enable us to identify which application or content is purchased through which handset model. Consequently, revenue sharing based on MO
data may not accurately reflect content providers and handset companies contribution to transactions. Recognizing the difference between MO and MR data, we apply discount ratios to our MO data to account for billing and transmission
failures. If we fail to accurately reward our content providers and handset companies pursuant to our revenue sharing arrangement with them due to billing and transmission failures, our relationship with them could be materially and adversely
affected, which may in turn materially and adversely affect our business and results of operations.



8



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##### Table of Contents

Policy changes by PRC government authorities and mobile network operators may also augment
billing and transmission failures. See  Significant changes in the policies, guidelines or practices of mobile network operators or the PRC government with respect to mobile applications and other content may result in lower revenues or
additional costs for us and materially adversely affect our business operations, financial condition and results of operations.

If we fail to establish a substantial market presence in the rapidly growing smartphone market, our growth prospects could be materially adversely
affected.

The mobile phone market in China has been transitioning from feature phones to smartphones in recent
years. Smartphones are technologically advanced devices with personal computer-level versatility that operate advanced operating systems such as Android, Apples iOS, BlackBerry OS, Linux, Symbian and Windows Phone. Smartphones are
becoming more affordable in China partly because of PRC government-subsidized programs. Smartphones are characterized by more powerful processors, larger screens and higher data storage capacity compared to feature phones, and are able to
easily install and run high performance multimedia applications. To maintain our user base and pursue monetization opportunities in the ever growing smartphone market, we have since 2012 shifted the focus of our mobile application business from
feature phones to smartphones. We have launched a portfolio of Maopao platform products for smartphones, including our Maopao App Store and Maopao Game Center.

Although we are actively pursuing strategic cooperation to pre-install Maopao platform products on an increasing number of smartphone models, we cannot assure you that we will be able to establish and
maintain a substantial market presence in the smartphone market in China. If the feature phone market continues to decline, and we fail to capture the opportunities in the growing smartphone market, our results of operations and financial
position could be materially adversely affected.

Our smartphone products operate mainly on Android-based operating systems. If Android
fails to maintain market share in the smartphone segment, our smartphone business may be adversely affected.

Android
is currently the dominant smartphone operating system in China, especially in the economic smartphone market. Our current smartphone products are developed for and operate solely on Android-based operating systems. Android may face competition from
existing operating systems such as Apples iOS, Microsofts Windows Phone and Blackberry OS, as well as new entrants to the mobile phone operating system market. We cannot assure you that Android-based operating systems will continue to
maintain or grow their market shares. If non Android-based smartphones begin capturing significant market share in the future, we will be prompted to spend substantial resources to develop and launch Maopao platform products for these operating
systems. If we fail to develop products and services on new and emerging operating systems, our smartphone user base may decline and our growth prospects could be adversely affected.

If our smartphone products do not achieve wide market acceptance or if we fail to generate profits with respect to such products, our results of operations may be adversely affected.

In May 2012, we launched Maopao App Store for smartphones, in particular Android-based smartphones, which we believe
will be one of the major smartphone operating systems in China. We have also launched a series of smartphone products, including Maopao Game Center and Maopao Browser. However, we are new entrants to the smartphone market and have limited
development and operating experience in this emerging market, which has different characteristics than the feature phone market.

For example, the smartphone market employs open-source technologies by which our users can freely download our applications through alternative sources and without accessing our Maopao App Store. We
cannot assure you that we can keep abreast of the technical developments of the smartphone market to provide quality smartphone products or that we can successfully establish relationships with smartphone companies in order to increase the
pre-installation of our Maopao platform products on their handsets. In addition, many smartphone companies have developed their own application stores. If Maopao App Store is installed on these smartphones, it will compete with the application
stores operated by these smartphone companies and smartphone users may not use our Maopao App Store as frequently as feature phone users.



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Revenues from mobile multi-player games and community-based applications offered in Maopao Community
are expected to continue to account for a significant portion of our future revenues. Any adverse developments relating to Maopao Community may adversely affect our results of operations.

We expect revenues from mobile multi-player games and community-based applications offered in Maopao Community to continue to generate a
significant amount of our revenues in the foreseeable future. For the fiscal years ended March 31, 2012, 2013 and 2014, Maopao Community revenues amounted to RMB110.5 million, RMB177.7 million and RMB144.0 million (US$23.2 million),
respectively. Accordingly, any of the following could materially adversely affect our business, financial condition and results of operations:



| |  |  | our failure to maintain or grow the user base of our Maopao Community;
| | - |  | ----------------------------------------------------------------------



| |  |  | our failure to maintain or increase average spending per user in Maopao Community;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | any decrease in the popularity of applications and content offered in Maopao Community;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | failure by us or third-party content providers to upgrade, enhance or improve these applications and content in a timely manner in response to changing
preferences of Maopao Community users; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | failure by us or third-party content providers to develop and launch new applications and content appealing to Maopao Community users.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

We may not be successful in effectively promoting or developing our brand.

We believe our future success depends on, among other things, continued market recognition and acceptance of our Maopao
brand. We have been actively promoting our Maopao brand by implementing various marketing initiatives including pre-installation of our Maopao platform products on smartphones and feature phones by cooperating with handset companies and
mobile network operators. If these marketing efforts turn out to be inadequate, our growth may be adversely affected.

In
addition, negative publicity or disputes involving us, our brand, product offerings or management could materially adversely affect public perception of our brand. Many of the factors that affect our brand may be outside our control. Concerns over
the quality of products and services of handset companies and content providers we partner with could also have a negative impact on our brand image and materially adversely affect our sales, profits and prospects.

Our ability to generate revenues could suffer if the mobile application market in China does not develop as anticipated.

The mobile application market in China has evolved rapidly in recent years, with the introduction of new business models, changing user
preferences, the increasing popularity of smartphones over feature phones, new service and product offerings, new competitors and evolving strategies by existing competitors. We expect these trends to continue, and in turn must adapt our strategies
to stay competitive in this market.

In particular, we are focused on offering a wide range of applications and other content
on Maopao platform by cooperating with various industry participants including Chinese handset companies, content providers, mobile service providers and mobile network operators. As smartphones become increasingly popular in China, we have since
2012 shifted our strategic focus from feature phones to smartphones and have launched a portfolio of smartphone products, including our Maopao App Store and Maopao Game Center for smartphones.

However, it is difficult to accurately predict the user demand and future size, composition and growth of the mobile application market
in China. Furthermore, given the limited history and rapidly evolving nature of this market, we cannot predict the price that users will be willing to pay for applications and content we offer or whether users will have concerns over security,
reliability, cost and quality of customer service. If the mobile application market in China does not develop as anticipated, our results of operations could be materially adversely affected.



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Laws and regulations regulating online games in China are developing and may change. If we fail to
obtain or maintain all applicable permits and approvals, our business and results of operations would be materially adversely affected.

Operating online games in China requires a series of permits and approvals. For example, we have obtained a license from the Ministry of Culture with respect to the operation of online games. In addition,
the Internet publication of online games requires pre-approval from the General Administration of Press and Publication, or GAPP. Effective on March 22, 2013, GAPP and the State Administration of Radio, Film and Television merged into one
entity, namely the State General Administration of Press, Publication, Radio, Film and Television, or SAPPRFT, which oversees the press, publication, radio, film and TV sectors in China. We operate a substantial majority of our online games in
collaboration with third-party content providers, and such content providers are in charge of obtaining the approvals from SAPPRFT. For the remaining online games we operate, we are responsible for obtaining approvals from SAPPRFT. Because the
requirement for SAPPRFT approval of online games was imposed in late 2009 and the approval process is lengthy, SAPPRFT has not yet approved any online games that we operate. With respect to the games that we operate alone, we have not submitted
applications for SAPPRFT approval as we are first required to obtain an online publication license from SAPPRFT. We are in the process of obtaining the online publication license. We cannot assure you that we will be able to obtain such license in a
timely manner or at all.

With respect to the online games that we operate in collaboration with third-party content
providers, the third-party content providers have submitted applications for SAPPRFT approval for some of the games. We have requested content providers to submit applications to SAPPRFT for approval of the remaining games as soon as possible. In
case we or such content providers fail to obtain SAPPRFT approval, we may be subject to various penalties, including fines and discontinuation of the relevant games. As online games are at an early stage of development in China, new laws and
regulations may require additional licenses and permits. As a result, substantial uncertainties exist regarding the interpretation and implementation of PRC laws and regulations applicable to the operation of online games. We cannot assure you that
we will be able to timely obtain required licenses or any other new license required, and we may be found in violation of PRC laws and regulations.

The PRC government has introduced various measures aimed at regulating online games, the provision of virtual currency and other related content. If we are deemed to have violated any of the rules
and regulations, we may be subject to penalties and our results of operations may be materially adversely affected.

On June 3, 2010, the PRC Ministry of Culture, or the MOC, issued the Tentative Rule on Administration of Online Games, or the Rule
on Online Games, effective as of August 1, 2010. According to the Rule on Online Games, companies that plan to engage in the operation of online games, issue virtual currencies and provide virtual currency transaction services must obtain a
license from the provincial counterpart of the MOC. This rule also regulates content review and other aspects of the operation of online games as well as virtual currency transaction services. In addition, the Rule on Online Games provides that all
domestic online games must be filed with MOC, and all imported online games must be approved by the MOC. See Item 4. Information on the Company  B. Business Overview  Regulations.

In addition, the Notice on the Reinforcement of the Administration of Internet Cafés and Online Games, or the Internet
Cafés Notice, issued by the MOC in February 2007, directs the Peoples Bank of China, or PBOC, to strengthen the administration of virtual currency in online games to avoid any adverse impact on the PRC economy and financial system. This
notice provides that the total amount of virtual currency issued by online game operators and the amount purchased by individual game players should be strictly limited, with a strict and clear division between virtual transactions and real
transactions carried out by way of electronic commerce. This notice also provides that virtual currency should only be used to purchase in-game virtual items.

Our mobile games may be subject to government approval before placement on Maopao platform. A portion of our revenues from Maopao Community are collected through the sale of our virtual currency, the K
Currency. Our item-based revenue model may cause additional concerns with PRC regulators who have been implementing regulations intended to limit the total amount of virtual currency issued by online game operators and the amount purchased by an
individual game player. The restrictions imposed by the above rules may result in lower sales of our virtual currency, and could adversely affect our Maopao Community revenues. If our operations or the applications and content on Maopao platform are
deemed to have violated any of these rules and regulations, we may be subject to penalties and our results of operations may be materially adversely affected.

Regulation and censorship of information disseminated over the Internet and wireless telecommunication networks in China may adversely affect our business, and we may be liable for information
displayed on, retrieved from or linked to our Maopao platform.

China has enacted regulations governing
telecommunication mobile service providers, Internet and wireless access and the distribution of news and other information over the Internet and wireless telecommunication networks. Under these regulations, Internet content providers and Internet
publishers, such as our company, are prohibited from posting or displaying over the Internet or wireless networks content that, among other things, violates PRC laws and regulations, impairs the national dignity of China, or is obscene,
superstitious, fraudulent or defamatory. When Internet content providers and Internet publishers find that information falling within the categories above is transmitted on their websites or platforms, they must terminate the transmission or delete
such information immediately, maintain records of the violations and report the violations to the authorities.



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Failure to comply with these requirements could result in the revocation of required
licenses and the closure of the websites or platforms involved. The website or platform operator may also be held liable for such prohibited information displayed on, retrieved from or linked to such website or platform. Mobile network operators
such as China Mobile also have their own policies prohibiting or restricting the distribution of inappropriate content. Since December 2009, the Chinese government has been increasing its efforts to crack down on inappropriate content disseminated
over the Internet and wireless networks.

On December 15, 2009, the Ministry of Industry and Information Technology of
the PRC, or MIIT, issued the Notice Regarding Plan for Further Regulating Obscene Materials on Mobile Phones, or Circular 672. Under Circular 672, mobile network operators are required to examine their business and promotional channels, as well as
the business of their partners, and must immediately terminate such business if any obscene material is involved. Mobile service providers involved in distributing or publishing obscene material on mobile handsets are subject to immediate suspension
or termination of cooperation with mobile network operators, and a violation will be reported to the authorities. Mobile network operators and mobile service providers must examine all websites accessed through mobile handsets and conduct daily
inspections of such websites. If any obscene material is found, access and transmission must cease and be reported to authorities.

On June 3, 2010, the MOC issued the Rule on Online Games, according to which companies that plan to operate online games, issue virtual currency and provide virtual currency transaction services must
obtain a license from the provincial counterpart of the MOC. The MOC is responsible for content review of online games. Online game operators are also required to establish a self-censorship mechanism and ensure the lawfulness of the content of
their games and corporate operations. On January 30, 2013, the State Council issued the Decision of the State Council on Revising the Regulations on the Protection of Right of Dissemination via Information Network (Order
No. 634). Order No. 634 became effective on March 1, 2013. According to Order No. 632, the fines against several infringement acts of right of dissemination via information network have been increased. A fine of five times
of the illegal business revenue or RMB 250,000 may be imposed.

As these regulations are subject to interpretation by the
authorities, we may not be able to determine the type of content that could result in liability as a mobile application store operator. Although we may determine that the mobile applications and content provided on Maopao platform comply with
regulatory requirements, regulatory authorities may hold a different view. In addition, we may not be able to control or restrict the content of other Internet content providers linked to or accessible through Maopao platform, despite our attempt to
monitor such content. For example, many industry participants we partner with, such as handset companies and content providers, have access to our technology. Personnel who have access to our technology may develop malware and other inappropriate
content.

Although we strive to closely monitor the content displayed on Maopao platform, a distributor of malware or other
inappropriate content developed in our proprietary format could disseminate such content directly through the Internet without accessing our server and users may download such content onto their mobile handsets. To the extent that regulatory
authorities find any of the applications and content on Maopao platform objectionable, they may require us to limit or eliminate the dissemination of such information or otherwise curtail such content on Maopao platform, which may reduce our user
traffic.

We may be subject to significant penalties for violations of regulations arising from information displayed on,
retrieved from or linked to Maopao platform, including a suspension or shutdown of our operations. Any violation or perceived violation of such regulations may subject us to claims of contractual breaches from the industry participants we work with,
including mobile service providers and handset companies, and we may face suspensions or termination of our cooperative relationships with other industry participants and/or claims for monetary damages, and our financial condition and results of
operations would be materially adversely affected.

We rely on third-party content providers for a majority of the applications and
content available on Maopao platform. Our failure to license or otherwise obtain applications or content that meet user demand would materially adversely affect our business.

We contract with third-party content providers to distribute their mobile applications and other content through Maopao platform. We
typically enter into exclusive/non-exclusive licensing agreements for a term of one to three years with third-party content providers, majority of which do not contain automatic renewal provisions. If we fail to renew or enter into new licensing
agreements with our content providers upon expiration of the existing agreements at commercially acceptable terms, our operations may be negatively impacted. In addition, some third-party content providers may introduce competing mobile applications
and content, which could make it more difficult or impossible for us to license their mobile applications and content in the future.



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There is no assurance that our content providers will continue to develop and launch
applications and other content for Maopao platform on a timely basis or at all. If we fail to offer a wide variety of mobile applications and content at reasonable prices, our financial condition and operating results may be materially adversely
affected.

Furthermore, we develop certain applications and content available on Maopao platform in-house, such as our card
game center. Such applications and content may compete with those of our content providers and may discourage our content providers from developing and upgrading similar applications or content for Maopao platform. If our collaboration with content
providers deteriorates or terminates, the availability and quality of applications for Maopao platform may suffer.

If we are unable to
successfully develop, license, launch and operate additional mobile applications and other attractive content that grows our user base and increases our revenues, our results of operations will be adversely affected.

Our success largely depends on our ability to anticipate and timely and effectively respond to changing user tastes and preferences and
technological advances. To further increase our user base and revenues, we are prompted to develop, license, launch and operate mobile games and other popular application and content to replace our existing ones as they reach the end of their useful
economic lives.

We are developing applications and other content in-house as well as licensing mobile applications and other
content from third-party content providers. We cannot assure you that we will be able to license from third-party content providers or develop in-house a sufficient number of mobile games and other applications and content on commercial acceptable
terms or at all, nor can we assure you that they will be well received among users. If we fail to develop, license or acquire mobile applications and other content that are commercially successful and appeal to users, our profitability and growth
prospects will decline.

Our failure to anticipate or successfully implement new technologies could render Maopao platform uncompetitive
or obsolete and reduce our revenues and market share.

The mobile applications industry is developing rapidly. We
invest in our proprietary Maopao platform and related technologies, including standard software development kits and tool suites that are critical to our success. We need to anticipate the emergence of new technologies and keep abreast of
technological advances in order to make our technologies, product offerings and development capabilities competitive in the market. We have been devoting significant financial resources in research, development and operations to penetrate the
emerging smartphone market in China.

However, development activities are inherently uncertain, and we might encounter
practical difficulties in commercializing our products. Our significant expenditures on research and development may not generate corresponding benefits. Given the fast pace mobile application store technology has developed, we may not be able to
timely improve Maopao platform and related technologies in a cost-effective manner, or at all. In addition, new technologies in the mobile application industry in China could render the technologies and product offerings we are developing or expect
to develop obsolete or less competitive, decreasing our revenues and market share.

Undetected programming errors or flaws in our Maopao
platform products and applications available through Maopao platform could harm our reputation or decrease market acceptance of Maopao platform.

Our Maopao platform products and applications available through our Maopao platform, such as multi-player games, which are subject to frequent improvement and update, may contain errors or flaws. As we
launch new features and updates under tight time constraint, these errors or flaws may not become apparent until the updated features or version are accessed by users. As a result, we mostly rely on our users to inform us of programming flaws
compromising their experience. If we fail to promptly resolve programming errors or flaws, we may lose users and our operating results, brand name and the market acceptance of Maopao platform products may suffer. In addition, Chinese government
authorities have promulgated rules and regulations targeting mobile service providers that charge for applications and other content without user consent. If our programming error or flaw inadvertently charges users without their consent, we may be
subject to administrative penalties and fines.

Failure to maintain effective customer service could harm our reputation or decrease
market acceptance of Maopao platform, which would materially adversely affect out results of operations.

Customer
service is critical to retaining current users and attracting potential users. If Maopao platform or the mobile applications and other content offered through Maopao platform contains errors or other flaws, or if we otherwise fail to provide quality
customer service, our users may be less inclined to use or recommend Maopao platform products to other potential users, and may switch to our competitors products.



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Some China-based Internet companies have experienced group complaints, sometimes organized
by their competitors or people attempting to profit from such complaints. We may not be able to timely and effectively address such complaints. Unsatisfactory customer service may disrupt our operations, compromise user experience, harm our
reputation, cause the number of our users to decline, and negatively affect market acceptance of Maopao platform products, any of which could materially adversely affect our results of operations.

Unexpected network interruptions, data loss, security breaches, computer virus attacks or other risks relating to the operation of Maopao platform
could materially adversely affect our business, financial condition and results of operations.

Any failure to
maintain the satisfactory performance, reliability, security and availability of Maopao platform products may harm our reputation and market share. Major risks include, among others, any breakdowns or system failures in our network infrastructure
resulting in a prolonged shutdown of all or a material portion of our servers, including failures attributable to sustained power outages or unauthorized attempts to access our systems.

Our critical servers and backup servers are placed at different locations in Hangzhou. As a result, our network systems are vulnerable
to natural disasters or accidents affecting Hangzhou and its surrounding areas, such as fire, flood, power outage, telecommunications failures, computer viruses, hacking and other similar occurrences. Any interruptions in the availability of our
product offerings could reduce user satisfaction and our competitiveness.

In addition, any security breach caused by
hacking, which involves unauthorized attempts to access our systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could
materially adversely affect our business, financial condition and results of operations. We do not maintain insurance policies covering losses relating to our systems, nor do we carry business interruption insurance.

The growth of our business may be adversely affected due to our failure to ensure the security and privacy of confidential user information.

A significant barrier to the development of wireless businesses is the secure transmission of confidential
information over the mobile network. We rely on proprietary encryption and authentication technology to provide the security and authentication necessary to effect secure transmission of confidential user information, such as user names and
passwords. While we have not experienced any material breach of our security measures to date, technology advancements, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the algorithms we
use to protect user information.

A party who is able to circumvent these security measures could misappropriate proprietary
information or cause interruptions in our operations. We may be required to expend significant capital and other resources to protect against or resolve such security breaches. Concerns over the security and privacy of user information may have a
material and adverse effect on our operations. To the extent that our activities involve proprietary information, security breaches could damage our reputation and expose us to risks of loss or litigation. There can be no assurance that our security
measures will be sufficient to prevent security breaches, and failure to prevent security breaches may materially adversely affect our business, prospects, financial condition and results of operations.

We could be liable for breaches of security of payment processing agents, which may materially adversely affect our reputation and business.

In addition to collection through mobile service providers, we collect a small portion of our revenues through
payment processing agents, which assist us in collecting sales proceeds through third-party payment channels such as game cards and other prepaid cards, bank remittances, China Post and virtual currency, such as QQ Currency. In transactions
utilizing third-party payment channels, secured transmission of confidential information, such as customers card numbers and expiration dates, personal information and billing addresses, over mobile networks, the Internet and/or
third-parties databases, is essential to maintain consumer confidence.

We do not have control over the security
measures of third-party payment channels and we cannot assure you that these security measures will be adequate in light of our expected increased usage of their payment channels. Security breaches in these payment channels could expose us to
litigation and possible liability for failure to secure customer transaction data and could harm our reputation and user experience and discourage users to pay through these third-party payment channels.



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Our business is increasingly subject to the risks of international operations.

International expansion forms an important component of our growth strategy. Expanding our business internationally exposes us to a
number of risks, including:



| |  |  | fluctuations in currency exchange rates;
| | - |  | ----------------------------------------



| |  |  | our ability to select the appropriate geographical regions for international expansion;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | difficulty in identifying appropriate local content providers, handset companies, mobile service providers or joint venture partners and establishing
and maintaining good relationships with them;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulty in understanding local markets and cultures;
| | - |  | -------------------------------------------------------



| |  |  | compliance with foreign laws and regulations, including import and export requirements, foreign exchange controls and cash repatriation restrictions,
data privacy requirements, labor laws and anti-competition regulations; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased costs associated with doing business in foreign jurisdictions.
| | - |  | ------------------------------------------------------------------------

Our financial condition and operating results could be significantly affected by these and other risks associated with international
operations. Although we have implemented policies and procedures designed to facilitate compliance with laws and regulations in foreign jurisdictions applicable to us, our employees or business partners could violate such laws and regulations or our
policies. Any such violations could materially adversely affect our financial condition and operating results.

Our business could
suffer if we do not successfully manage our growth.

We have experienced a period of rapid growth and expansion that
has placed a strain on our management personnel, systems and resources. To accommodate our growth, we may need to implement and maintain a variety of new and improved operational and financial systems, procedures and controls, and improve our
accounting and other internal management systems, all of which require substantial management efforts.

We will also need to
expand, train, manage and motivate our workforce, and manage our relationships with our users and other industry participants, such as content providers, mobile service providers and mobile handset companies. All of these endeavors will require
substantial management effort and skill and additional costs. We cannot assure you that we will be able to effectively implement our growth strategies and manage the growth of our operations, and any failure to do so may hamper our business
strategy.

We may not be able to adequately protect our intellectual property rights, which could harm our business and competitive
position.

Trademarks, trade secrets, copyrights and other intellectual property are important to our business. We
rely on a combination of trademark, copyright and trade secret protection laws in China and other jurisdictions, as well as confidentiality procedures and contractual provisions, to protect our intellectual property and our brand. We have invested
significant resources to develop our intellectual property and acquire licenses to use and distribute the intellectual property of others for our business. Our failure to maintain or protect these rights could harm our business. In addition, any
unauthorized use of our intellectual property by third parties may adversely affect our revenues and reputation.

The
validity, enforceability and scope of protection available under intellectual property laws with respect to the mobile and Internet industries in China are uncertain and still evolving. Implementation and enforcement of PRC intellectual property
laws have historically been deficient, ineffective and hampered by corruption and local protectionism. Accordingly, protection of intellectual property rights in China may not be as effective as in the United States or other developed countries.
Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and we may need to resort to litigation to enforce or defend our patents or to determine the enforceability, scope and validity of our proprietary rights or
those of others. Such litigation and an adverse determination in any such litigation could result in substantial costs and divert resources and management attention, which could harm our business and competitive position.

Our results of operations, financial performance and business may suffer from intellectual property rights infringement claims against us.

We may be subject to claims alleging that we are improperly using intellectual property owned by others or otherwise
infringing their intellectual property rights. We license a substantial portion of the applications and content available on Maopao platform from third-party content providers, including multi-player games, mobile music and book titles. Although we
implement measures to ensure that the licensors are the rightful owners of intellectual property rights with respect to the licensed content, we may be subject to infringement claims regarding such licensed content.



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Regardless of the validity of such claims, we could incur costs defending or settling any
intellectual property infringement disputes. Intellectual property litigation could force us to, among other things, cease offering certain mobile applications or content, develop alternatives or obtain licenses from the owners of the infringed
intellectual property. We may not be successful in developing alternatives or in obtaining licenses on commercially acceptable terms or at all, materially adversely affecting our results of operations, financial performance and business.

We substantially depend on our management and other key personnel. If we lose their services, we could incur significant costs in finding suitable
replacements and our business may be severely disrupted.

Our success heavily depends upon the continued services of
our management and other key personnel. In particular, we rely on the expertise and experience of Mr. Michael Tao Song, our chairman and chief executive officer and Mr. John Bi, our chief financial officer. If one or more of our senior
management or other key personnel were unable or unwilling to continue their employment with us, we may not be able to replace them easily or at all. Our business, financial condition and results of operations may suffer, and we may incur additional
expenses to recruit, train and retain personnel.

If any of our management or key personnel joins a competitor or forms a
competing company, we may lose business partners, know-how, key professionals and staff members. Each of our executive officers has entered into an employment agreement which contains confidentiality clauses and certain confidentiality agreements
with us. However, if any dispute arises with our officers, the non-competition provisions contained in their confidentiality and non-competition clauses or agreements may not be enforceable, especially in China, where most of these executive
officers and key employees reside, on the grounds that we have not provided adequate compensation to these executive officers for their non-competition obligations as required under PRC law.

We may not be successful in attracting and retaining qualified personnel.

Hiring and retaining additional qualified employees are critical to our operations and planned expansion. The mobile application industry in China is characterized by high demand and intense competition
for talent, and we may need to offer higher compensation and other benefits in order to attract and retain key personnel, particularly considering our location in Hangzhou, a region less attractive to some potential employees compared to cities such
as Beijing or Shanghai. We cannot assure you that we will be able to attract or retain a sufficient number of qualified personnel to achieve our business objectives. In addition, as our business has grown rapidly, our ability to train and integrate
new employees into our operations may not meet the increasing demands of our business.

Our principal shareholders have substantial
influence over our company and their interests may not be aligned with the interests of our other holders of our common shares and ADSs.

Our principal shareholders, Xplane Ltd., a British Virgin Islands company, and Mr. Michael Tao Song, our chief executive officer and chairman, held 29.1% and 30.8% (including 9.8% held by
Ms. Qinyi Zhu, wife of Mr. Song, through Xplane Ltd.) of our outstanding share capital as of March 31, 2014, respectively. Accordingly, Xplane Ltd. and Mr. Song have substantial influence over our business, including decisions
regarding mergers, consolidations and the sale of all or substantially all of our assets, the election of directors and other significant corporate actions. This concentration of ownership may discourage, delay or prevent a change in control of our
company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the price of our ADSs. Alternatively, our principal shareholders may cause a merger,
consolidation or change of control transaction even our other shareholders oppose such a transaction.

We have limited insurance
coverage, which could expose us to significant costs and business disruption.

Other than insurance for some of our
vehicles, we have not purchased any insurance to cover our assets, property and business. If we were to incur substantial losses or liabilities due to fire, explosion, flood or a wide range of other natural disasters or accidents or business
interruption, our financial condition and results of operations could be materially adversely affected.

The audit report included in
this annual report are prepared by auditors who are not inspected by the Public Company Accounting Oversight Board and as such investors may be deprived of the benefits of such inspection

Our independent registered public accounting firm that issues the audit reports included in this annual report filed with the SEC, as
auditors of companies that are traded publicly in the United States and a firm registered with the U.S. Public Company Accounting Oversight Board (United States), or the PCAOB, is required by the laws of the United States to undergo regular
inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located in the Peoples Republic of China, a jurisdiction where the PCAOB is currently unable to conduct
inspections without the approval of the Chinese authorities, our auditors are not currently inspected by the PCAOB.



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Inspections of other firms that the PCAOB has conducted outside China have identified
deficiencies in those firms audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. This lack of PCAOB inspections in China prevents the PCAOB from regularly
evaluating our auditors audits and its quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditors audit procedures or quality control procedures as
compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

Proceedings instituted by the SEC against five PRC-based accounting firms, including our independent registered public accounting firm, could
result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

In late 2012, the SEC commenced administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese affiliates of the big
four accounting firms (including our auditors) and also against Dahua (the former BDO affiliate in China). The Rule 102(e) proceedings initiated by the SEC relate to these firms inability to produce documents, including audit work
papers, in response to the request of the SEC pursuant to Section 106 of the Sarbanes-Oxley Act of 2002, as the auditors located in the PRC are not in a position lawfully to produce documents directly to the SEC because of restrictions under
PRC law and specific directives issued by the China Securities Regulatory Commission, or CSRC. The issues raised by the proceedings are not specific to our auditors or to us, but affect equally all audit firms based in China and all China-based
businesses with securities listed in the United States.

In January 2014, the administrative judge reached an Initial
Decision that the big four accounting firms should be barred from practicing before the SEC for six months. However, it is currently impossible to determine the ultimate outcome of this matter as the accounting firms have filed a
Petition for Review of the Initial Decision and pending that review the effect of the Initial Decision is suspended. The SEC commissioners will review the Initial Decision, determine whether there has been any violation and, if so, determine the
appropriate remedy to be placed on these audit firms. Once such an order was made, the accounting firms would have a further right to appeal to the U.S. Federal courts, and the effect of the order might be further stayed pending the outcome of that
appeal.

Depending upon the final outcome, listed companies in the United States with major PRC operations may find it
difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act, including possible delisting.
Moreover, any negative news about the proceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of our ADSs may be adversely affected.

If we fail to maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial
results or prevent fraud, adversely affecting investor confidence and the market price of our ADSs.

As a public
company in the United States, we are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 and related rules, or Section 404, require us to include a management report which contains managements
assessment of the effectiveness of our internal controls over financial reporting in our annual report.

Our management has
concluded that our internal control over financial reporting is effective as of March 31, 2014. See Item 15. Controls and Procedures. Our independent registered public accounting firm has issued an attestation report on our
internal control over financial report, which concludes that our internal control over financial reporting is effective in all material aspects.

If we fail to maintain the adequacy of our internal control over financial reporting, we may not be able to conclude that we have effective internal control over financial reporting and our financial
statements could become unreliable, which could result in material misstatements in our financial statements. In addition, if we fail to meet our reporting obligations, investors may lose confidence in our reported financial information. Any of
these events could limit our access to capital markets, harm our results of operations, and decrease the trading price of our ADSs.



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Furthermore, we have incurred and anticipate that we will continue to incur considerable
costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.

We may undertake acquisitions, investments, joint ventures or other strategic alliances, which could materially adversely affect our business. In addition, such undertakings may not be
successful.

Our strategy includes plans to grow both organically and through acquisitions, joint ventures or other
strategic alliances. Acquisitions, joint ventures and strategic alliances may expose us to new operational, regulatory and market risks, as well as risks associated with additional capital requirements. We may not be able to identify
suitable acquisition candidates or alliance partners. Even if we identify suitable candidates or partners, we may be unable to complete an acquisition or alliance on terms commercially acceptable to us. If we fail to identify appropriate
candidates or partners, or complete desired acquisitions, we may not be able to implement our strategies effectively or efficiently.

In addition, our ability to successfully integrate acquired companies and their operations may be adversely affected by a number of factors. These factors include:



| |  |  | diversion of managements attention;
| | - |  | ------------------------------------



| |  |  | difficulties in retaining personnel of the acquired companies;
| | - |  | --------------------------------------------------------------



| |  |  | unanticipated problems or legal liabilities; and
| | - |  | ------------------------------------------------



| |  |  | tax and accounting issues.
| | - |  | --------------------------

If we fail to integrate acquired companies efficiently, our earnings, revenue growth and business could be negatively affected.

Furthermore, the acquired companies may not perform to our expectations for various reasons, including legislative or regulatory changes that affect the products in which the acquired companies specialize
and the loss of key personnel and users. If we do not realize the benefits envisioned from such acquisitions, joint ventures or other strategic alliances, our overall profitability and growth plans may suffer.

We may not realize gains from our equity investments.

We have made capital investments in a number of start-up companies in the mobile network and mobile games industry. As of March 31, 2014, our equity investments included RMB76.6 million (US$12.3
million) in 21 private companies primarily engaged in wireless technology development and related applications in the PRC. We have also invested in one private equity fund targeting the mobile and technology space to achieve long term returns.
Our equity investments may fail to appreciate or decline in value and our ability to recover our investments will depend on the success of the companies in which we invest.

Equity investments involve significant risks. Any equity investment we make in a company could be subject to dilution as a result of the issuance of additional equity interests. In addition, equity
interests are subordinate to indebtedness in the event that the issuer cannot meet its obligations or files for bankruptcy. In addition, if a company in which we invest requires additional capital and is unable to obtain it, we may not recover
our investment.

We may not recover our equity investments if the companies in which we invest do not perform well and we
could incur impairment losses, which could materially and adversely affect our results of operations. For example, we recognized a RMB1.4 million impairment of our investment in Beijing DigiMobi Studio Co., Ltd., or DigiMobi, during the fiscal year
ended March 31, 2013, a RMB0.8 million (US$0.1 million) impairment of our investment in Mokee Technologies (Shanghai) Co., Ltd., or Mokee, and a RMB0.7 million (US$0.1 million) impairment of our investment in Beijing Dream Sky Technology Ltd.,
or Dream Sky, during the fiscal year ended March 31, 2014, due to the continuing underperformance and negative cash flow forecast of these entities.

We may be unable to secure additional funding or to obtain such funding on favorable terms.

We believe that our current cash and cash equivalents and the anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the next 12 months. We may, however, require
additional cash resources to finance our growth or other future developments, including investments or acquisitions. The amount and timing of such additional financing needs will vary principally depending on the timing of new product or service
launches, investments or acquisitions, and cash flow from our operations.



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If our resources are insufficient to satisfy our cash requirements, we may seek to sell
additional equity or debt securities or obtain a credit facility. The sale of additional equity securities or securities convertible into our common shares could result in additional dilution to our shareholders. The incurrence of indebtedness would
result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations.

Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:



| |  |  | investors perception of, and demand for, securities of mobile application store operators in China;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | conditions of the United States and other capital markets in which we may seek to raise funds;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | our results of operations, financial condition and cash flows;
| | - |  | --------------------------------------------------------------



| |  |  | PRC governmental regulation of foreign investment in China;
| | - |  | -----------------------------------------------------------



| |  |  | economic, political and other conditions in China; and
| | - |  | ------------------------------------------------------



| |  |  | PRC governmental policies relating to foreign currency borrowings.
| | - |  | ------------------------------------------------------------------

Financing may not be available in amounts or on terms acceptable to us, if at all, especially if there is a recession or other events
causing volatility in capital markets worldwide.

We may experience fluctuations in quarterly operating results.

Our quarterly operating results have experienced fluctuations due to a variety of factors, including policy changes, the demand for our
products and competing products, our launch of new mobile applications and content and our revenue sharing arrangements with industry participants. Although our revenue sharing arrangements with industry participants vary within a small range, such
differences may result in gross margin fluctuations from period to period.

For instance, our cost of revenues as a
percentage of total revenues may be higher in a particular period if a handset company that is entitled to a relatively higher percentage of revenue introduces a new handset model through which we generate a substantial amount of revenues, compared
to other periods when revenues are generated through handsets from handset companies that are entitled to a relatively lower percentage of revenue. In addition, changes in policies and practices of network operators may affect the availability of
mobile service providers and user experience in a particular period, result in increased billing and transmission failure rates, cause delays associated with switching from certain mobile service providers to others, and affect our quarterly results
of operations.

Our revenues may be affected by seasonality. For example, our revenues tend to be higher during holiday
seasons when users tend to purchase more in-app virtual items, premium features and other content through Maopao platform. Such seasonality was less prominent in recent periods, but may become more prominent in the future. Operating results for a
particular period are not necessarily indicative of our future results. If our operating results for any quarter fall below investor expectations or estimates by securities research analysts, the trading price of our ADSs may decline.

Risks Related to Doing Business in China

Changes in economic and political policies of the PRC government could materially adversely affect the economic growth of China, negatively
impacting our business.

We conduct substantially all of our operations in China. Accordingly, our business, results
of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in China. Due to the global financial crisis, the growth of the Chinese economy slowed in the second half of 2008 and
early 2009. There is also uncertainty with respect to the Chinese economy for 2014 and beyond. Any prolonged slowdown in the Chinese economy, in particular the mobile applications industry, could negatively impact our business, operating results and
financial condition. For example, our users may decrease spending on our offerings, while we may have difficulty expanding our user base to offset the impact of decreased spending by our existing users.



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The PRC government exercises significant control over Chinas economic growth through
direct allocation of resources, monetary and tax policies and a host of other government policies, such as those that encourage or restrict investment in certain industries by foreign investors, control the exchange between RMB and foreign
currencies and regulate the growth of the economy or specific markets. Government involvement has been instrumental in Chinas significant growth in the past 30 years. If the PRC governments policies fail to help the Chinese economy
achieve further growth or otherwise negatively affect our business, our growth rate, strategy and results of operations could be adversely affected.

If the PRC government determines that the contractual arrangements that establish the structure for operating our business do not comply with applicable PRC laws and regulations, we could be subject
to severe penalties.

We are a Cayman Islands company and, as such, we are classified as a foreign enterprise under
Chinese law, and our PRC subsidiaries, Hangzhou Dianneng Technologies Co., Ltd., or Dianneng, Pusida (Beijing) Technologies Co., Ltd., or Pusida, and Hangzhou Tiandian Investment Consulting Co., Ltd., or Tiandian, are foreign-invested enterprises.
Various regulations in China restrict foreign-invested entities from holding certain licenses required to operate mobile application store business, including telecommunications value-added services operation licenses, and from making certain
strategic investments in China.

In light of these restrictions, we rely on our SPEs, Hangzhou Sky, Mijia, Fanyi, Feineng,
Miyi, Najia, Tianchu, Kaimi, Dangyi, Zunqi, Geyuan, Mugu, Feidong and Weipin, to hold and maintain the licenses necessary to operate our mobile application store business in China, and our SPE, Sky Investment, to make strategic investments in China.
We do not have any equity interest in our SPEs, but receive their economic benefits through various contractual arrangements and certain corporate governance and shareholder rights arrangements.

We have entered into contractual arrangements with each of our SPEs and each of their shareholders which provide us with control over
our SPEs. For a description of these contractual arrangements, see Item 4. Information on the Company  B. Organizational Structure  Contractual Arrangements with the SPEs and their Shareholders.

Under the equity pledge agreements included in these contractual arrangements, the shareholders of Hangzhou Sky, Mijia, Fanyi, Feineng,
Miyi, Najia, Tianchu , Kaimi, Dangyi, Zunqi, Geyuan, Mugu, Feidong and Weipin pledged their respective equity interests in these SPEs to Dianneng and the shareholder of Sky Investment pledged its equity interests in Sky Investment to Tiandian.
According to PRC law, such a pledge must be registered with the relevant administration for industry and commerce. We have registered the pledge of our SPEs equity interests with the local Administration for Industry and Commerce. However, we
cannot assure you that Dianneng and Tiandian will be able to enforce these pledges if PRC laws and regulations applicable to the equity pledge change in the future.

The Circular Regarding Strengthening the Administration of Foreign Investment in and Operation of Value-added Telecommunications Business, or the Circular, issued by the MIIT in July 2006, reiterated the
regulations on foreign investment in telecommunications businesses, which require foreign investors to set up foreign-invested enterprises and obtain a business operating license to conduct any value-added telecommunications business in China. Under
the Circular, a domestic company that holds a telecommunications value-added services operation license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance, including
providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business illegally in China.

The relevant trademarks and domain names that are used in the value-added telecommunications business must be owned by the local license holder. The Circular further requires each telecommunications
value-added services operation license holder to have the necessary facilities for its approved operations and to maintain such facilities in the regions covered by its license. In addition, all value-added telecommunications mobile service
providers must maintain network and information security in accordance with the standards set forth under relevant PRC regulations. Due to a lack of regulatory interpretations, it is unclear what impact the Circular will have on us or the other
Chinese telecommunications and Internet companies that have adopted the same or similar corporate and contractual structures as ours.

On September 28, 2009, the General Administration of Press and Publication, or GAPP, together with the National Copyright Administration and the National Office of Combating Pornography and Illegal
Publications, jointly issued a Notice on Further Strengthening of the Administration of Pre-examination and Approval of Online Games and the Examination and Approval of Imported Online Games, or the GAPP Notice. The GAPP Notice provides that foreign
investors may not invest in online game operating businesses in China via wholly-owned, equity joint venture or cooperative joint venture investments, and expressly prohibits foreign investors from gaining control over or participating in domestic
online game operators through indirect measures such as establishing joint venture companies or contractual or technical arrangements.



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As advised by our PRC counsel, Han Kun Law Offices, the provision of the GAPP Notice
discussed above with respect to regulation of online game operation does not apply to us or our subsidiaries or SPEs, nor does it affect our control over our subsidiaries and SPEs. However, substantial uncertainties remain regarding the
interpretation and application of the GAPP Notice. Accordingly, GAPP may ultimately take a view that is contrary to the opinion of our PRC legal counsel. In the event that we or any of our PRC operating companies violate the GAPP Notice in
connection with the operation of online games, GAPP in conjunction with the relevant regulatory authorities would have the power to investigate and deal with such violations, including in serious cases by refusing or cancelling relevant licenses and
registrations.

In the opinion of Han Kun Law Offices, our PRC counsel, (i) the ownership structure and the business and
operation model of each of our SPEs are in compliance with all existing PRC laws and regulations and (ii) each contract under Diannengs contractual arrangements with Hangzhou Sky, Mijia, Fanyi, Feineng, Miyi, Najia, Tianchu, Zunqi,
Geyuan, Kaimi, Dangyi, Mugu, Feidong and Weipin and each of their shareholders and each contract under Tiandians contractual arrangements with Sky Investment and its shareholder is valid and binding and will not result in any violation of PRC
laws or regulations currently in effect. However, there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including the Circular and the GAPP Notice. Accordingly, we cannot assure you that PRC
regulatory authorities will ultimately take a view that is consistent with the opinion of our PRC counsel.

If we are found
to be in violation of any existing or future PRC laws or regulations, including the Circular and the GAPP Notice, or fail to obtain or maintain any of the required permits or approvals, the relevant regulatory authorities would have broad discretion
in dealing with such violation, including, without limitation:



| |  |  | revoking the business and operating licenses of our wholly owned subsidiaries, consolidated SPEs and subsidiaries incorporated in the PRC;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | discontinuing or restricting any related party transactions among our wholly-owned subsidiaries, consolidated SPEs and subsidiaries incorporated in the
PRC;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | levying fines or imposing other requirements on our wholly owned subsidiaries, consolidated SPEs and subsidiaries incorporated in the PRC;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | requiring us to change our ownership structure or restructure our operations; or
| | - |  | --------------------------------------------------------------------------------



| |  |  | restricting or prohibiting us from using the proceeds from public offerings to finance our operations in the PRC.
| | - |  | -----------------------------------------------------------------------------------------------------------------

Any of these or similar actions could significantly disrupt our business and materially reduce our revenues, profitability and cash
flows.

If any of these penalties results in our inability to direct the activities of any of our SPEs that significantly
impacts our economic performance, and/or our failure to receive the economic benefits from any of them, we may not be able to consolidate the financial results of these SPEs into our consolidated financial statements in accordance with IFRS.

Our contractual arrangements with the SPEs and their respective shareholders may not provide control over the SPEs as effectively as
direct ownership of these companies.

We conduct our mobile application business in China through Hangzhou Sky,
Mijia, Fanyi, Feineng, Miyi, Najia, Tianchu, Zunqi, Geyuan, Kaimi, Dangyi, Mugu, Feidong and Weipin. In addition, we pursue strategic investment opportunities in China through Sky Investment. We enter into contractual arrangements with our SPEs and
their respective shareholders in order to provide us with effective control over these companies. See Item 4. Information on the Company  B. Organizational Structure  Contractual Arrangements with the SPEs and their
Shareholders.

As a result of these contractual arrangements, we have control over our SPEs. Accordingly, we
consolidate the results of operations, assets and liabilities of the SPEs in our financial statements.

Although Han Kun Law
Offices, our PRC legal counsel, has advised us that each contract under these contractual arrangements is valid, binding and enforceable under current PRC laws and regulations, these contractual arrangements may not be as effective in providing us
with control over the SPEs as direct ownership. In addition, the SPEs or their respective shareholders may breach the contractual arrangements.



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We cannot assure you that when conflicts of interest arise, the SPEs and their respective
shareholders will act completely in our interests or that these conflicts of interests will be resolved in our favor. In any such event, we would have to rely on legal remedies under PRC law. These remedies may not always be effective, particularly
in light of uncertainties in the PRC legal system. See  Uncertainties with respect to the PRC legal system could materially adversely affect us.

In the fiscal years ended March 31, 2012, 2013 and 2014, our SPEs contributed in aggregate 98.9%, 95.8% and 90.0%, respectively, of our total revenues. In the event that we are unable to enforce the
contractual arrangements, we may not be able to direct the activities of our SPEs, and as a result, our ability to conduct our business may be negatively affected, and we may not be able to consolidate the financial results of the SPEs into our
consolidated financial statements in accordance with IFRS.

We believe that we have the ability to renew the contractual
arrangements with our consolidated SPEs when necessary based on (i) our exclusive option to purchase all or part of the equity interests in our consolidated SPEs, when and to the extent permitted by PRC law, or to request any existing
shareholders of our consolidated SPEs to transfer all or part of their equity interests in our consolidated SPEs to another PRC person or entity designated by us at any time at our discretion, and (ii) the powers of attorney that shareholders
of our consolidated SPEs have granted to us.

Our ability to enforce the equity pledge agreements between us and the
shareholders of our consolidated SPEs may be subject to limitations imposed by PRC laws, rules and regulations.

Under our
equity pledge agreements with our consolidated SPEs and their respective shareholders, these shareholders have agreed to pledge all of their respective equity interests in the consolidated SPEs to us. These pledges secure the performance of our
consolidated SPEs obligations under the various contractual arrangements, including the business operation agreements and technology development agreements. As of March 31, 2014, the pledges of equity interests by shareholders of our
consolidated SPEs were registered with the relevant local branch of the State Administration for Industry & Commerce.

According to applicable PRC laws, when an obligor fails to pay its debt, the pledgee may choose to either conclude an agreement with the
pledgor to obtain the pledged equity or seek payments from the proceeds of the auction or sale of the pledged equity. If our consolidated SPEs or their shareholders fail to perform their respective obligations secured by the pledges under the equity
pledge agreements, one remedy in the event of default under the equity pledge agreements is to require the pledgor to sell the pledged equity interests in an auction or private sale and remit the proceeds to our wholly owned subsidiaries in the PRC,
net of related taxes and expenses. Such an auction or private sale may not result in our receipt of the full value of the equity interests in our consolidated SPEs.

In addition, the registration forms of the local branch of the State Administration for Industry & Commerce, indicate that, the amounts of registered equity interests pledged to our wholly owned
subsidiaries by Hangzhou Sky, Mijia, Fanyi, Feineng, Miyi, Najia, Tianchu, Zunqi, Geyuan, Kaimi, Dangyi, Mugu, Feidong and Weipin and Sky Investment, were RMB10.0 million, RMB10.0 million, RMB10.0 million, RMB1.0 million, RMB1.0 million, RMB1.0
million, RMB1.0 million, RMB3.0 million, RMB1.0 million, RMB0.5 million, RMB0.5 million, RMB0.5 million, RMB1.0 million and RMB0.5 million and RMB55.0 million, respectively, which in aggregate represent 100% of the registered capital of our
consolidated SPEs. A PRC court may take the position that the amounts listed on the equity pledge registration forms represent the full amounts of the collateral that have been registered and perfected. In that event, a PRC court could deem the
obligations secured under the equity pledge agreements in excess of the amounts listed on the equity pledge registration forms to be unsecured debt, materially adversely affecting our ability to be repaid.

The shareholders of our consolidated SPEs may have potential conflicts of interest with us, which may substantially disrupt our business.

The registered shareholders of our consolidated SPEs are our current or former directors, officers or employees and
their relatives. For example, Mr. Michael Tao Song, our founder, chairman and chief executive officer, is one of the registered shareholders of Mijia, a consolidated SPE incorporated in 2007. In addition, Mr. Song owned approximately 21%
of our outstanding common shares as of the date of this annual report on Form 20-F. See Item 4. Information on the Company  B. Organizational Structure for a list of the registered shareholders of our consolidated SPEs and their
respective shareholdings.

Conflicts of interest may arise with respect to such shareholders duties to us and our
consolidated SPEs. If any conflicts arise, these shareholders may not act in our best interests and such conflicts of interest may not be resolved in our favor. In addition, these shareholders may breach or cause our consolidated SPEs to breach or
refuse to renew their existing contractual arrangements that allow us to exercise effective control over them and to receive economic benefits from them.



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The laws of the Cayman Islands provide that directors of a company owe a fiduciary duty to
the company, which requires them to act in good faith and in the best interests of the company and not to use their positions for personal gain. If certain shareholders of our consolidated SPEs do not comply with their fiduciary duties to us as our
designated directors, or if we cannot resolve any conflicts of interest or disputes between us and any current or future registered shareholders of our consolidated SPEs, we would have to rely on legal proceedings to remedy the situation, the
outcome of which would be uncertain and which could substantially disrupt our business.

Contractual arrangements we have entered into
may be subject to scrutiny by PRC tax authorities, and a finding that we or our SPEs owe additional taxes could reduce our net income and the value of your investment.

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by
PRC tax authorities. We could face adverse tax consequences if PRC tax authorities determine that the contractual arrangements between our PRC subsidiaries on the one hand, and our SPEs on the other, do not represent an arms-length price and
adjust our SPEs income in the form of a transfer pricing adjustment.

A transfer pricing adjustment could, among other
things, result in a reduction, for PRC tax purposes, of expense deductions recorded by our SPEs, which could in turn increase their respective tax liabilities. In addition, PRC tax authorities may impose late payment fees and other penalties on our
SPEs for underpaid taxes. Our net income may be adversely affected if our SPEs tax liabilities increase or if they are found to be subject to late payment fees or other penalties.

Our business benefits from certain government tax incentives. Expiration, reduction or discontinuation of, or changes to, these incentives will increase our tax burden and reduce our net income.

Hangzhou Sky, as a software enterprise, was entitled to a full exemption from enterprise income tax, or
EIT, in 2008 and 2009 and a 50% reduced EIT rate from 2010 to 2012. The reduced applicable EIT rate for Hangzhou Sky from 2010 to 2012 was 12.5%. Hangzhou Sky was qualified as a high and new technology enterprise in 2011, entitling it to
a preferential EIT tax rate of 15% from 2012 to 2014. Once Hangzhou Sky ceases to qualify as a high and new technology enterprise, its applicable EIT rate may increase to up to 25%, which could adversely affect our results of operations.

In addition, Mijia, as a software enterprise, was entitled to a full exemption from EIT in 2010 and 2011 and a
50% reduced EIT rate from 2012 to 2014. The reduced applicable EIT rate for Mijia from 2012 to 2014 is 12.5%. Once Mijia ceases to qualify as a software enterprise, its applicable EIT rate may increase to up to 25%, which could adversely
affect our results of operations.

Miyi, as a software enterprise, is entitled to a full exemption from EIT in
2013 and 2014 and a 50% reduced EIT rate from 2015 to 2017. The reduced applicable EIT rate for Mijia from 2015 to 2017 is 12.5%. Once Miyi ceases to qualify as a software enterprise, its applicable EIT rate may increase to up to 25%,
which could adversely affect our results of operations.

Najia, as a software enterprise, is entitled to a full
exemption from EIT in 2013 and 2014 and a 50% reduced EIT rate from 2015 to 2017. The reduced applicable EIT rate for Mijia from 2015 to 2017 is 12.5%. Once Miyi ceases to qualify as a software enterprise, its applicable EIT rate may
increase to up to 25%, which could adversely affect our results of operations.

Prior to January 1, 2012, pursuant to
Provisional Regulation of China on Business Tax and its implementing rules, any entity or individual rendering services in the territory of PRC was generally subject to a business tax at the rate of 5% on the revenues generated from provision of
such services. In November 2011, the MOF and the State Administration of Taxation, or the SAT, jointly issued two circulars setting out the details of the VAT Pilot Program, which changes business tax to value-added tax for certain industries,
including, among others, research and development and technical services, information technology services, and cultural and creative services. The VAT Pilot Program initially applied only to these industries in Shanghai, and has been expanded to
eight additional provinces, including Beijing, Tianjin, Zhejiang Province (including Ningbo), Anhui Province, Guangdong Province (including Shenzhen), Fujian Province (including Xiamen), Hubei Province and Jiangsu Province in 2012. On May 24,
2013, the MOF and the SAT jointly issued the Circular on Tax Policies on the Nationwide Expansion of the Pilot Program for the Collection of Value Added Tax in Lieu of Business Tax in the Transportation Industry and Certain Modern Services
Industries, or Circular 37, which expanded the VAT Pilot Program nationwide as of August 1, 2013. Pursuant to the Circular on the Inclusion of Telecommunications Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax
promulgated by Ministry of Finance and the SAT on April 29, 2014, or Circular 43, Circular 37 has been replaced by Circular 43 and the VAT Pilot Program has been expanded to cover telecommunication service, as currently conducted by us, as of
June 1, 2014. See Item 5. Operating and Financial Review and Prospects  Taxation.



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Various local governments in China have provided discretionary preferential tax treatments
to us. However, these local governments may decide to reduce or eliminate these preferential tax treatments at any time. Furthermore, these local implementations of tax laws may be found to violate national laws or regulations and we may be subject
to retroactive imposition of higher taxes as a result. Any expiration, reduction or discontinuation of, or changes to, these tax incentives will increase our tax burden and reduce our net income and materially adversely affect our operating results.

We may rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may
have, and any limitation on the ability of our subsidiaries to make payments to us, or the tax implications of making payments to us, could materially adversely affect our ability to conduct our business.

We are a holding company, and we may rely on dividends and other distributions on equity from our PRC subsidiaries for our cash
requirements. PRC regulations permit our subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is
required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. These reserves are not distributable as cash dividends.

Furthermore, if our PRC subsidiaries incur debt in the future, the instruments governing the debt may restrict their ability to pay
dividends or make other payments to us. Most of our assets are held by, and substantially all of our earnings and cash flows are attributable to, our PRC subsidiaries. If earnings from our PRC subsidiaries were to decline, our earnings and cash flow
would be materially adversely affected.

Our cash flows are principally derived from dividends paid to us by our PRC
subsidiaries. As a result, our ability to distribute dividends largely depends on earnings from our PRC subsidiaries and their ability to pay dividends out of those earnings. We cannot assure you that our PRC subsidiaries will generate sufficient
earnings and cash flows in the future to make up the historical accumulated losses and pay dividends or otherwise distribute sufficient funds to enable us to meet our obligations, pay interest and expenses or declare dividends.

In addition, under the PRC Enterprise Income Tax Law and the Implementing Rules, both of which became effective on January 1, 2008,
dividends generated from our PRC subsidiaries after January 1, 2008 and payable to us may be subject to a withholding tax rate of 10% if the PRC tax authorities subsequently determine that we are a non-resident enterprise, unless a tax treaty
with China provides for a different withholding arrangement.

We may be classified as a resident enterprise for PRC EIT
purposes, which could result in our global income becoming subject to the 25% PRC EIT rate.

The PRC Enterprise
Income Tax Law provides that enterprises established outside of China whose effective management is located in China are considered resident enterprises and will generally be subject to the uniform 25% EIT rate on global
income. Under the Implementing Rules, effective management is defined as substantial and overall management and control over such aspects as the production and business, personnel, accounts and properties of an enterprise.

In April 2009, the State Administration of Taxation released a circular that sets out the standards and procedures for determining the
location of the effective management of an enterprise registered outside of the PRC and funded by Chinese enterprises as controlling investors, or a Chinese Funded Enterprise. Under the circular, a Chinese Funded Enterprise shall be
considered a resident enterprise if all of the following apply: (i) a Chinese Funded Enterprises major management department and personnel who are responsible for carrying out daily operations are located in the PRC; (ii) the
department or the personnel who have the right to decide or approve the Chinese Funded Enterprises financial and human resource matters are located in the PRC; (iii) the major assets, account book, company seal and meeting minutes of the
Chinese Funded Enterprise are located or stored in the PRC; and (iv) the directors or management personnel holding no less than 50% voting rights of the Chinese Funded Enterprise habitually reside in the PRC.

The circular provides that the above standards shall apply to enterprises registered outside of the PRC and funded by Chinese
enterprises as controlling investors, and therefore such standards may be cited for reference only and may not be directly adopted when considering whether our effective management is in the PRC or not. Accordingly, it is still uncertain
whether we may be considered a resident enterprise under the PRC Enterprise Income Tax Law. If we are considered a resident enterprise and earn income other than dividends from our PRC subsidiaries such as income from our international operations,
we will be subject to a 25% PRC income tax rate on our global income, which could significantly increase our tax burden and materially adversely affect our cash flow and profitability.



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If we are classified as a resident enterprise for PRC EIT purposes, you may be subject to
PRC withholding tax on dividends from us or to PRC income tax on gains realized on the transfer of our ADSs or common shares.

Under the PRC Enterprise Income Tax Law and related Implementing Rules, PRC income tax at the rate of 10% is applicable to dividends payable to investors that are non-resident enterprises,
which do not have an establishment or place of business in the PRC, or which have such establishment or place of business if the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends
have their source within the PRC. Similarly, any gain realized on the transfer of ADSs or shares by such investors is also subject to the 10% PRC income tax rate if such gain is regarded as income derived from sources within the PRC unless a treaty
otherwise provides.

If we are considered a PRC resident enterprise, it is unclear whether dividends we pay with
respect to our common shares or ADSs, or the gain you may realize from the transfer of our common shares or ADSs, would be treated as income derived from sources within the PRC and be subject to PRC tax. If we are required under the PRC Enterprise
Income Tax Law to withhold PRC income tax on dividends payable to our non-PRC investors that are non-resident enterprises, or if you are required to pay PRC income tax on the transfer of our common shares or ADSs, the value of your
investment in our common shares or ADSs may be materially adversely affected.

We face uncertainty regarding PRC tax reporting
obligations and consequences for certain indirect transfers of the stock of our operating company.

Pursuant to the
Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued by the PRC State Administration of Taxation on December 10, 2009, where a foreign investor transfers the equity interests
of a PRC resident enterprise indirectly by way of the sale of equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less
than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor should report such Indirect Transfer to the competent tax authority of the PRC within 30 days of execution of the equity transfer agreement for such Indirect
Transfer.

The PRC tax authority will examine the true nature of the Indirect Transfer, and if the tax authority considers
that the foreign investor has adopted an abusive arrangement without reasonable commercial purposes in order to avoid PRC tax, it will disregard the existence of the overseas holding company used for tax planning purposes and re-characterize the
Indirect Transfer. As a result, gains derived from such Indirect Transfer may be subject to PRC withholding tax at a rate of up to 10%.

Uncertainties with respect to the PRC legal system could materially adversely affect us.

We conduct our business primarily through our subsidiaries and SPEs in China. Our operations in China are governed by PRC laws and
regulations. The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value.

Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal
system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions
and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.

In
addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these
policies and rules until sometime after the violation. In addition, any litigation in China may be protracted and result in substantial costs and divert resources and management attention.

PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making additional loans or capital contributions to our PRC operating
subsidiaries, which could materially adversely affect our liquidity and our ability to fund and expand our business.

As an offshore holding company of our PRC operating subsidiaries, we may make additional loans to our PRC subsidiaries, or we may make
additional capital contributions to our PRC subsidiaries. Loans by us to our PRC subsidiaries, which are foreign-invested enterprises, to finance their activities cannot exceed statutory limits and must be registered with the State Administration of
Foreign Exchange, or SAFE, or its local counterpart.



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Capital contributions must be approved by the PRC Ministry of Commerce or its local
counterpart. We may not be able to obtain these government approvals on a timely basis, if at all, with respect to future capital contributions by us to our PRC subsidiaries. If we fail to receive such approvals, our ability to capitalize our PRC
operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

Governmental control of currency conversion may adversely affect the value of your investment.

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of
currency out of China. We receive substantially all of our revenues in RMB. Under our current corporate structure, our income primarily comes from dividends and other payments from our PRC subsidiaries. Shortages in the availability of foreign
currency may restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations.

Under PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and
expenditures from trade-related transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. However, approval from appropriate
government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses, such as the repayment of loans denominated in foreign currencies.

The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If
the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

In addition, on August 29, 2008, SAFE promulgated Circular 142 to regulate the conversion of foreign currency into Renminbi by a
foreign-invested company by restricting the use of the converted Renminbi. Circular 142 requires that the registered capital of a foreign-invested company that has been settled in Renminbi converted from foreign currencies may only be used for
purposes within its business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC. In addition, SAFE strengthened its oversight of the flow and use of the registered capital of a
foreign-invested company settled in Renminbi converted from foreign currencies.

The use of such Renminbi capital may not be
changed without SAFEs approval, and may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been used. Violations of Circular 142 will result in severe penalties, such as heavy fines. As a result, Circular
142 may significantly limit our ability to transfer the net proceeds from any offering of our securities to our subsidiaries in the PRC. We may not be able to convert the net proceeds into Renminbi to invest in or acquire any other PRC companies, or
establish other SPEs in the PRC.

On November 16, 2011, SAFE promulgated the Circular of the State Administration of
Foreign Exchange on Issues Relating to Further Clarification and Regulation of Certain Capital Account Items under Foreign Exchange Control (Circular 45) to further strengthen and clarify its existing regulations on foreign exchange
control under SAFE Circular 142. Circular 45 expressly prohibits foreign invested entities, including wholly foreign owned enterprises, from converting registered capital in foreign exchange into RMB for the purpose of equity investment, granting
certain loans, repayment of intercompany loans, and repayment of bank loans which have been transferred to a third party.

Further, Circular 45 generally prohibits foreign invested entities, such as our PRC subsidiaries, from converting registered capital in
foreign exchange into RMB for the payment of various types of cash deposits. If our variable interest entity requires financial support from us or our PRC subsidiaries in the future and we find it necessary to use foreign currency-denominated
capital to provide such financial support, our ability to fund our variable interest entitys operations will be subject to statutory limits and restrictions, including those described above.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding
companies, including SAFE Circular 142, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to our
PRC subsidiaries or any consolidated affiliated entities or with respect to future capital contributions by us to our PRC subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to capitalize or otherwise fund
our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.



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Fluctuations in the value of the RMB may materially adversely affect the value of your investment.

The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other
things, changes in political and economic conditions. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the
following three years. For almost two years after reaching a high against the U.S. dollar in July 2008, the Renminbi traded within a narrow band against the U.S. dollar, remaining within 1% of its July 2008 high. In June 2010, the PRC government
announced that it would increase Renminbi exchange rate flexibility. From June 2010 to March 2012, the RMB appreciated by 7.8% against the U.S. dollar. In March 2014, the Peoples Bank of China widened the band around which the value of the
Renminbi is allowed to deviate from the daily reference rate, which may allow for greater volatility in the U.S. dollar and Renminbi exchange rate. There remains significant international pressure on the PRC government to adopt a more flexible
currency policy, which could result in greater fluctuation of the Renminbi against the U.S. dollar.

Substantially all of our
revenues, and a significant portion of our financial assets, are denominated in RMB. We principally rely on dividends and other distributions paid to us by our PRC subsidiaries. Any significant revaluation of the RMB may materially adversely affect
our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. Any fluctuations of the exchange rate between the RMB and the U.S. dollar could also result in foreign currency
translation losses for financial reporting purposes.

We may be subject to penalties, including restrictions on our ability to inject
capital into our PRC subsidiaries and our PRC subsidiaries ability to distribute profits to us, if our PRC resident shareholders or beneficial owners fail to comply with relevant PRC foreign exchange rules.

SAFE issued a public notice in October 2005 requiring PRC residents to register with the local SAFE branch before establishing or
controlling any company outside of China for the purpose of capital financing with assets or equities of PRC companies, or an offshore special purpose vehicle. PRC residents that are shareholders and/or beneficial owners of offshore
special purpose companies established before November 1, 2005 were required to register with the local SAFE branch before March 31, 2006.

In addition, any PRC resident that is a shareholder of an offshore special purpose vehicle is required to amend its SAFE registration with respect to that offshore special purpose company in connection
with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China or other material changes in share capital. In May 2007, SAFE issued relevant
guidance to its local branches with respect to the process for SAFE registration, which standardized more specific and stringent supervision of the registration relating to the SAFE notice.

As of the date of this annual report, all of our shareholders and beneficial owners who are subject to the SAFE notice have obtained
registration in accordance with its requirements.

We are committed to comply with the SAFE notice and have taken steps to
help ensure that our shareholders and beneficial owners who are subject to the SAFE notice also comply with the relevant rules. However, we cannot provide any assurance that all of our shareholders and beneficial owners who are PRC residents will
comply with our request to make, obtain or update any applicable registrations or comply with other requirements required by the SAFE notice or other related rules. In case of any non-compliance on any of our PRC resident shareholders or beneficial
owners, our PRC subsidiaries and such shareholders and beneficial owners may be subject to fines and other legal sanctions, including restriction on our ability to contribute additional capital into our PRC subsidiaries and our PRC
subsidiaries ability to distribute dividends to our offshore holding companies, which will adversely affect our business. In July 2014, the SAFE notice was superseded by Notice on Domestic Residents Offshore Financing and Roundtrip
Investment Through Special Purpose Vehicles. The impact of this recent regulatory development on our business operations remains unclear.

Failure to comply with the registration requirements for employee share option plans may subject our PRC equity incentive plan participants or us
to fines and other legal or administrative sanctions.

On February 15, 2012, SAFE promulgated the Notice on
Foreign Exchange Administration of PRC Residents Participating in Share Incentive Plans of Offshore Listed Companies, or SAFE Circular No. 7, to replace the previous Operating Procedures for Administration of Domestic Individuals Participating
in the Employee Stock Ownership Plan or Stock Option Plan of Offshore Listed Companies. SAFE Circular No. 7 regulates foreign exchange matters associated with employee stock option incentives or similar incentives permitted under applicable
laws and regulations granted to PRC residents by companies whose shares are listed on offshore stock exchanges. Pursuant to SAFE Circular No. 7, all PRC residents participating in share incentive plans of offshore listed companies shall,
through their employers, jointly retain qualified PRC agents to register with local SAFE branches. PRC residents include PRC nationals or foreign citizens having been consecutively residing in PRC for not less than one year, acting as directors,
supervisors, senior management personnel or other employees of PRC entities affiliated with such offshore listed company. A qualified PRC agent may be a PRC entity involved in the share incentive plan or a PRC institution eligible for asset
trusteeship, which is lawfully selected to handle various foreign exchange matters related to share incentive plans and applies annually for a quota for conversion and/or payment of foreign currencies in connection with the domestic
individuals exercise of their employee stock options. The foreign exchange proceeds received by PRC residents from sale of shares under share incentive plans granted by offshore listed companies must be remitted to bank accounts in China
opened by their employers or PRC agents.



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Furthermore, a Notice Concerning Individual Income Tax on Earnings from Employee Stock
Options, jointly issued by the MOF and SAT, provides that domestic companies that implement employee share option programs must file the employee share option plans and other relevant documents with local tax authorities having jurisdiction over the
companies before implementing such plans, and must file share option exercise notices and other relevant documents with local tax authorities before exercise by their employees of any share options, and clarify whether the shares issuable under the
employee share options referenced in the notices are shares of publicly-listed companies.

We have registered with the local
SAFE bureau on behalf of our employees who have been granted shares or share options under our share incentive plan and follow other procedures set forth in SAFE Circular No. 7 and other applicable regulations and we have filed the employee
share option plans and other relevant documents with local tax authorities with competent jurisdiction. If we or any of our PRC option holders fail to comply with SAFE Circular No. 7, Notice Concerning Individual Income Tax on Earnings from
Employee Stock Options or other relevant regulations in connection with our future grants of shares or share options, we or the relevant PRC option holders may be subject to fines and other legal or administrative sanctions.

The approval of the CSRC may have been required in connection with our initial public offering in December 2010 under PRC regulations. The
regulation also establishes more complex procedures for acquisitions conducted by foreign investors that could make it more difficult for us to grow through acquisitions.

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration
Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and SAFE jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule,
which became effective on September 8, 2006. The M&A Rule requires offshore special purpose vehicles that are controlled by PRC companies or residents and that have been formed for the purpose of seeking a public listing on an overseas
stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange.

On September 21, 2006, the CSRC published a notice on its website specifying the documents and materials that special purpose vehicles are required to submit when seeking CSRC approval for their
listings outside of China. The interpretation and application of the M&A Rule remain unclear, and our initial public offering may have required approval from the CSRC. If CSRC approval had been required for our initial public offering in
December 2010, our failure to obtain or delay in obtaining such approval would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies, which could include fines and penalties on our operations in China, restrictions or
limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially adversely affect our business, results of operations and financial condition.

Our PRC counsel, Han Kun Law Offices, has advised us that, based on their understanding of the current PRC laws, regulations and rules
and the procedures announced on September 21, 2006, because (i) we established our PRC subsidiaries by means of direct investment other than by merger or acquisition of the equity or assets of PRC domestic companies and (ii) our
contractual arrangements with Hangzhou Sky and Mijia do not constitute the acquisition of Hangzhou Sky and Mijia, we were not required to apply with the CSRC for the approval of the listing and trading of our ADSs on NASDAQ.

The M&A Rule also established additional procedures and requirements that are expected to make merger and acquisition activities in
China by foreign investors more time-consuming and complex, including requirements in some instances that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC
domestic enterprise, or that the approval from the Ministry of Commerce be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies.

We may grow our business in part by acquiring other companies operating in our industry. Complying with the M&A Rule to complete
such transactions could be time-consuming, and any required approval processes, including approval from Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or
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Failure to obtain or maintain all applicable permits and approvals would materially adversely affect
our business.

Our SPEs may be required to obtain applicable permits or approvals from relevant regulatory
authorities in order to operate. For example, we began to offer mobile video content through one of our SPEs in May 2010 but have not generated significant revenues from such content. Pursuant to PRC regulations, to offer mobile video content, the
operating entity is required to obtain an online audio-visual broadcasting license. Further, the regulations only allow state-owned or state-controlled entities to apply for such license.

In addition, if government authorities challenge our practice, we may be subject to various penalties, including fines and the
discontinuation of or restriction on our offering of mobile video content subject to the regulations. Any such disruption in operations would materially adversely affect our financial condition and results of operations.

We face risks of health epidemics and other disasters, which could severely disrupt our operations.

Our business could be materially adversely affected by the outbreak of H1N1, or swine influenza, avian influenza, severe acute
respiratory syndrome, or SARS, influenza A virus subtype H7N9, or another epidemic. For instance, in early 2013, there were outbreaks of influenza A virus subtype H7N9 in nine provinces of China. Any prolonged recurrence of swine influenza, avian
influenza, SARS or other adverse public health developments in China could adversely affect economic activities in China and require the temporary closure of our offices. Such closures could severely disrupt our business and adversely affect our
results of operations.

Our operations are vulnerable to interruption and damage from man-made or natural disasters,
including wars, acts of terrorism, snowstorms, earthquakes, fire, floods, environmental accidents, power loss, communications failures and similar events. If any man-made or natural disaster were to occur in the future, our ability to operate our
business could be seriously impaired.

Labor laws in the PRC may adversely affect our results of operations.

China adopted a labor contract law effective on January 1, 2008 that establishes more restrictions and increases costs for
employers to dismiss employees. For example, the labor contract law requires certain terminations to be based upon seniority and not merit. If we significantly change or decrease our workforce in the PRC, the labor contract law could adversely
affect our ability to effect such changes in a timely and cost effective manner, and our results of operations could be adversely affected.

In addition, the labor contract law requires employers to pay compensation to their employees who agree to bear non-competition obligations on a monthly basis after the employees employments expire
or terminate, which will increase employers operating expenses. According to Interpretation (IV) of the Supreme Peoples Court of Several Issues on the Application of Law in the Trial of Labor Dispute Cases, promulgated on
January 18, 2013, a court will sustain an employees claim of three months compensation even when the employer requests to terminate the non-competition obligations.

Risks Related to Our ADSs

The market price for our ADSs may be volatile, which could
result in substantial losses to you.

The market price for our ADSs may be volatile and subject to wide fluctuations
in response to factors such as actual or anticipated fluctuations in our quarterly results of operations, changes in financial estimates by securities research analysts, changes in the economic performance or market valuations of other companies
operating in our industry, announcements by us or our competitors of material acquisitions, strategic partnerships, joint ventures or capital commitments, fluctuations in exchange rates between the RMB and the U.S. dollar, intellectual property
litigation, release of transfer restrictions on our outstanding shares or ADSs, and economic or political conditions in China. In addition, the performance and fluctuation in market prices of other companies with operations located mainly in China
that have listed their securities in the United States may affect the volatility in the price and trading volumes of our ADSs.

Volatility in global capital markets, as was experienced during the global financial crisis, could also have an adverse effect on the
market price of our ADSs. Furthermore, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also
materially adversely affect the market price of our ADSs.

Future sales or issuances of a substantial number of our ADSs or common
shares could adversely affect the price of our ADSs.

If our shareholders sell substantial amounts of our ADSs,
including those issued upon the exercise of outstanding options, in the public market, the market price of our ADSs could fall. Such sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time
and price that we deem appropriate. If any existing shareholder or shareholders sell a substantial amount of common shares, the prevailing market price for our ADSs could decline.



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In addition, we may issue additional common shares or ADSs to fund future acquisitions or
our operations. Your ownership interest in our company would be diluted and this, in turn, could materially adversely affect the price of our ADSs.

You may not have the same voting rights as the holders of our common shares and must act through the depositary to exercise your rights.

As an ADS holder, you may only exercise voting rights with respect to the underlying common shares in accordance with the provisions of
the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will vote the underlying common shares in accordance with these instructions.
Otherwise, you will not be able to exercise your right to vote unless you withdraw the common shares underlying your ADSs.

Pursuant to our amended and restated memorandum and articles of association, we may convene a shareholders meeting upon ten clear
days notice. When a shareholders meeting is convened, you may not receive sufficient advance notice to withdraw the common shares underlying your ADSs to allow you to vote with respect to any specific matter. If we give timely notice,
the depositary will notify you of the upcoming vote and arrange to deliver our voting materials to you.

We cannot assure you
that you will receive the voting materials in time to instruct the depositary to vote the common shares underlying your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the
manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and the common shares underlying your ADSs may not be voted as you requested.

Your right to participate in any future rights offerings may be limited, which may dilute your holdings and you may not receive cash dividends if it is impractical to make them available to you.

From time to time, we may distribute rights to our shareholders, including rights to acquire our securities.
However, we cannot make any such rights available to you in the United States unless we register such rights and the securities to which such rights relate under the Securities Act or an exemption from the registration requirements is available.
Also, under the deposit agreement, the depositary will not make rights available to you unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act or exempt from registration
under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to
establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.

In addition, the depositary has agreed to pay you the cash dividends or other distributions it or the custodian receives on our common
shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of common shares your ADSs represent. However, the depositary may, at its discretion, decide that it is
inequitable or impractical to make a distribution available to any holders of ADSs. For example, the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may
be less than the cost of mailing them. In these cases, the depositary may decide not to the such property and you will not receive such distribution.

You may be subject to limitations on the transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time
to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any
time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited
because we are organized under Cayman Islands law, conduct substantially all of our operations in China and all of our directors and officers reside outside the United States.

We are organized in the Cayman Islands and substantially all of our assets are located outside of the United States. We conduct
substantially all of our operations in China through our subsidiaries and SPEs in China. All of our officers and directors reside outside the United States and a substantial portion of their assets are located outside of the United States. As a
result, it may be difficult for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the securities laws or otherwise.



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Even if you are successful in bringing an action of this kind, the laws of the Cayman
Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. In addition, it is uncertain whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of
U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state, and it is uncertain whether Cayman Islands or PRC courts would be competent to hear original actions
brought in the Cayman Islands or the PRC against us or such persons predicated upon the securities laws of the United States or any state.

Our corporate affairs are governed by our memorandum and articles of association and by the Companies Law and common law of the Cayman Islands. The rights of shareholders to take legal action against our
directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is
derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands.

The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly
established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, because Cayman Islands law has no legislation specifically dedicated to the rights of investors in securities, and thus no
statutorily defined private causes of action to investors in securities such as those found under the Securities Act or the Exchange Act, it provides significantly less protection to investors. In addition, Cayman Islands companies may not have
standing to initiate a shareholder derivative action before the federal courts of the United States.

As a result of all of
the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a corporation organized in a jurisdiction in the United
States.

Our articles of association contain anti-takeover provisions that could discourage a third party from acquiring us, which could
limit our shareholders opportunity to sell their shares, including common shares represented by our ADSs, at a premium.

Our amended and restated articles of association contain provisions to limit the ability of others to acquire control of our company. These provisions could deprive our shareholders of an opportunity to
sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. For example, our board of directors has the authority, without further
action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions,
including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our common shares, in the form of ADS or otherwise. Preferred shares
could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult.

If our board of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our common shares and ADSs may be materially adversely
affected. Furthermore, our amended and restated articles of association provide for a staggered board, which means that our directors are divided into three classes, with one-third of our board standing for election every year. This means that at
least two annual shareholders meetings, instead of one, are generally required in order to effect a change in a majority of our directors. Our staggered board can discourage proxy contests for the election of our directors and purchases of
substantial blocks of our shares by making it more difficult for a potential acquirer to take control of our board in a relatively short time. In addition, our shareholders holding, in aggregate, less than 25% of the paid up capital of our company
do not have the ability to call general meetings or to propose special matters for consideration at such meetings.

We believe we may be
a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ADSs or common shares.

Based on the market price of our ADSs, the value of our assets and the composition of our income and assets, we believe we were a passive foreign investment company, or PFIC, for U.S. federal income tax
purposes for our taxable year ended March 31, 2014. A non-U.S. corporation will be a PFIC for any taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its
assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. A separate determination must be made after the close of each
taxable year as to whether we were a PFIC for that year.



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Because the value of our assets for purposes of the PFIC test will generally be determined
by reference to the market price of our ADSs and common shares, our PFIC status will depend in large part on the market price of our ADSs and common shares, which may fluctuate significantly. Because we believe we were a PFIC for the taxable year
ended March 31, 2014, certain adverse U.S. federal income tax consequences could apply to U.S. Holders (as defined in Item 10. Additional Information  E. Taxation  United States Federal Income Taxation) of our ADSs or
common shares with respect to any excess distribution received from us and any gain from a sale or other disposition of our ADSs or common shares. See Item 10. Additional Information  E. Taxation  United States Federal
Income Taxation  Passive Foreign Investment Company.



|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------

Our legal and commercial name is Sky-mobi Limited. We commenced operations through Hangzhou Sky, a limited liability company established in China, in 2005. Hangzhou Sky is principally engaged in our
cooperation with handset companies and providing mobile applications and content to our users. To enable us to raise capital from international investors, our holding company, Sky-mobi Limited (formerly Profit Star Limited), was incorporated under
the laws of the Cayman Islands as an exempted limited liability company in April 2007. In June 2007, we incorporated Pusida, our wholly-owned subsidiary in China.

PRC laws restrict foreign-invested entities engaging in value-added telecommunication services. To comply with PRC laws, we conduct our value-added telecommunication services through 14 SPEs, Hangzhou
Sky, Mijia, Fanyi, Feineng, Miyi, Najia, Tianchu, Kaimi, Dangyi, Zunqi, Geyuan, Mugu, Feidong and Weipin.

In January 2007,
Mijia was incorporated in China. In August 2007, through Pusida, we entered into certain contractual arrangements with Mijia and its shareholders through which we gained effective control over the operations of Mijia.

In August 2007, through Pusida, we entered into certain contractual arrangements with Hangzhou Sky and its shareholders through which we
gained effective control over the operations of Hangzhou Sky.

In August 2007, we issued in a private placement an aggregate
of 50,000,000 Series A preferred shares for an aggregate purchase price of US$3.5 million to Sequoia Capital China II L.P.

In July 2009, Fanyi was incorporated in China. In December 2009, we incorporated Dianneng, our wholly-owned subsidiary in China. In
December 2009, through Dianneng, we entered into certain contractual arrangements with Fanyi and its shareholders through which we gained effective control over the operations of Fanyi.

In May 2010, we incorporated Profit Star Software (HK) Limited, or Profit Star HK, our wholly-owned subsidiary, in Hong Kong. We
transferred all of our equity interest in Pusida and Dianneng to Profit Star HK.

In July 2010, through Dianneng, we entered
into contractual arrangements with Hangzhou Sky, Mijia and their respective shareholders to replace their previous contractual arrangements with Pusida.

In May 2010, we and an independent third party established Shenzhen Heisha Technologies Co., Ltd., or Heisha. We invested RMB3.0 million and obtained a 65% equity interest in Heisha. Heisha cooperates
with overseas parties to provide mobile payment processing agent services in overseas markets, such as India, Thailand and the Philippines. In July 2010, Sky Global Network Technologies Limited (Hong Kong), a wholly-owned subsidiary of Fanyi, was
incorporated in Hong Kong, primarily engaging in mobile application store services for overseas markets.

In October 2010,
Profit Star Limited changed its name to Sky-mobi Limited. In October 2010, we incorporated Sky Network International Limited, or Sky BVI, our wholly-owned subsidiary, in the British Virgin Islands. We made Sky BVI our intermediary holding company by
transferring all of our equity interest in Profit Star HK to Sky BVI.

In November 2010, our shareholders approved a
200-for-1 share split of our common shares and Series A preferred shares, which became effective immediately. At the same time, the par value of our common shares changed from US$0.01 per share to US$0.00005 per share. Unless otherwise noted, all
share information and per share data included in this annual report and accompanying financial statements has been adjusted to reflect this share split and change in par value.

In December 2010, Feineng was incorporated in China. Feineng primarily engages in the provision of mobile application services. In
February 2011, through Dianneng, we entered into certain contractual arrangements with Feineng and its shareholders through which we gained effective control over the operations of Feineng.



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In December 2010, we completed our initial public offering of 6,125,000 ADSs, each
representing eight common shares of par value US$0.00005 per share. We listed our ADSs on NASDAQ on December 10, 2010.

In April 2011, we sold a portion of our equity interests in Heisha to its minority shareholder for cash consideration of RMB1,152,000.
Further, Heisha issued additional preferred shares to a third party partner, which further diluted our equity interest in Heisha to 31%. As a result, we no longer control Heisha.

In August 2011, we, through Profit Star HK, our wholly-owned subsidiary, established JSky Technology Limited, or JSky Cayman, in the
Cayman Islands, with iaSolution Investment (BVI) Limited, an independent third party. We invested US$90,000 and obtained a 60% equity interest in JSky Cayman. JSky Cayman primarily engages in mobile application store services for overseas markets.
JSky Cayman was dissolved in July 2013.

In September 2011, we incorporated Me Share Limited in Hong Kong, which was 100%
held by Sky BVI. Me Share Limited primarily engages in mobile application store services for overseas markets, with a majority of its R&D support from Shanghai Texuan Information Technologies Co., Ltd., Me Share Limiteds wholly owned
subsidiary in China.

In October 2011, Sky Investment was incorporated in China. Sky Investment focuses primarily on pursuing
strategic investment opportunities in China. In December 2011, we incorporated Tiandian, our wholly-owned subsidiary in China, and entered into certain contractual arrangements with Sky Investment and its shareholder through which we gained
effective control over the operations of Sky Investment.

In December 2011, we incorporated Sky Technologies International
Limited, or Sky Technologies BVI, our subsidiary, in the British Virgin Islands. We then transferred all of our equity interest in Me Share Limited to Sky Technologies BVI.

In April 2012, Me Share Limited changed its name to Powerplay Technologies Limited.

In August 2012, Miyi and Najia were incorporated in China, which focus primarily on the provision of mobile application services. In November 2012, through Dianneng, we entered into certain
contractual arrangements with Miyi, Najia and their respective shareholders through which we gained effective control over the operations of Miyi and Najia.

In September 2012, we incorporated a wholly-owned subsidiary, Kaimi, in China, which primarily engages in the provision of mobile application services.

In October 2012, Tianchu was incorporated in China. Tianchu primarily engages in the provision of mobile application services. In
December 2012, through Dianneng, we entered into certain contractual arrangements with Tianchu and its shareholders through which we gained effective control over the operations of Tianchu.

In June 2013, we established Hangzhou Mopin Technologies Co., Ltd. which primarily focuses on cooperation with mobile network operators.
We held 83.9% interest in this subsidiary and the remaining 4.1% interest is held by Mr. Zhiguo Zhou, one of our officers. See Item 7. Major Shareholders and Related Party Transactions  B. Related Party Transactions  Other
Related Party Transactions.

In June 2013, we sold a 30% interest on a fully diluted basis in Sky Technologies BVI to
Mr. Qing Yan, a former officer of our Company, and Mr. Wenjie Wu, an officer of our Company. See Item 7. Major Shareholders and Related Party Transactions  B. Related Party Transactions  Other Related Party
Transactions.

In June 2013, through Dianneng, we entered into certain contractual arrangement with Zunqi through which
we gained effective control over the operations of Zunqi.

In October 2013, through Dianneng, we entered into certain
contractual arrangement with Geyuan through which we gained effective control over the operations of Geyuan.

We transferred
100% equity interest of Kaimi to an employee of our Group, and in March 2014, through Dianneng, we entered into certain contractual arrangements with Kaimi through which we gained effective control over the operations of Kaimi.

In March 2014, through Dianneng, we entered into certain contractual arrangement with Dangyi through which we gained effective control
over the operations of Dangyi.



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In May 2014, through Dianneng, we entered into certain contractual arrangement with Feidong
through which we gained effective control over the operations of Feidong.

In June 2014, through Dianneng, we entered into
certain contractual arrangement with Mugu through which we gained effective control over the operations of Mugu.

In June
2014, through Dianneng, we entered into certain contractual arrangement with Weipin through which we gained effective control over the operations of Weipin.

Our principal executive offices are located at 10/F, Building B, United Mansion, No. 2, Zijinghua Road, Hangzhou, Zhejiang 310013, Peoples Republic of China. Our telephone number at
this address is +86-571-87770978. Our registered office in the Cayman Islands is located at the offices of Codan Trust Company (Cayman Limited), our registered agent, at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111,
Cayman Islands.



|A. | Business Overview
|-- | -----------------

We
are a leading mobile application platform in China in terms of user visits. Our core product, Maopao App Store, allows users to browse and download a wide range of entertainment-oriented mobile applications and content, including mobile games, music
and books.

We launched our Maopao App Store for feature phones in December 2006, followed by a variety of other feature
phone applications, through which we captured substantial market share in China. In response to the rise of smartphones and increasing demand for applications and mobile content designed to run on smartphones, we launched Maopao App Store for
smartphones in May 2012. Throughout the years, we have developed a portfolio of Maopao platform products, including Maopao Game Center, Maopao Browser and Maopao Community that provide rich functionality and engaging user experience to Android
smartphone and feature phone users. As of March 31, 2014, our Maopao platform products had attracted an aggregate of approximately 1.4 billion users, including approximately 147.3 million smartphone users.

Building upon our success in Maopao App Store, we are in the process of enhancing our Maopao platform to integrate a broad spectrum of
Maopao platform products and third-party applications and mobile content that cater to the varying interests, needs and preferences of smartphone and feature phone users in China.

As a leading mobile application platform in China with a large and highly engaged user base, we are centrally positioned in Chinas
mobile application sector, which includes:



| |  |  | users, especially younger users with modest income, who constitute the majority of Chinas mobile phone user base. Maopao platform
enables smartphone and feature phone users to access and download a wide selection of mobile games and other applications and content for free and purchase in-app virtual items, premium features and other content at attractive price points;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | handset companies, including handset manufacturers and independent handset design houses. We contract with a large number of handset
companies to pre-install our Maopao App Store as their default app store, together with a combination of other Maopao platform applications that may appeal to their customers, on their handsets before shipment. We provide these handset
companies customers with a standardized interface to access and download applications and content from our Maopao platform. Such strategic collaboration effectively extends our user reach to the customers of these handsets. We work closely
with handset companies to optimize the performance of Maopao platform applications on each of their handset models and enhance user experience. As of March 31, 2014, we had cooperation agreements with over 250 smartphone and 800 feature phone
handset companies to pre-install Maopao platform applications on their products, respectively;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | mobile network operators retail locations.We work closely with China Mobile and China Unicom to provide customized software
services at their physical stores, including the pre-installation of a wide range of applications that appeal to their customers.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | content providers, including application developers and content title owners. Through Maopao platform, their applications and content are
distributed to thousands of handset models and hundreds of millions of potential users without extensive customization. We had entered into licensing agreements with over 200 content providers as of March 31, 2014 to provide a variety of
applications and other content, ranging from single-user games and multi-player games to social network applications that appeal to Chinese users;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | payment service providers, including mobile service providers, mobile network operators and other payment processing agents. We primarily
collect sales proceeds from mobile service providers who utilize mobile network operators billing channels to collect payments when users purchase in-app virtual items, premium features and other content from Maopao platform. In addition, we
work with independent payment processing agents to collect sales proceeds through a variety of payment channels, including pre-paid phone cards, pre-paid game cards, bank debit cards, wire-transfers and Alipay. As of March 31, 2014, we had
entered into agreements with over 40 mobile service providers in China and overseas and six independent payment processing agents. We are also increasingly collaborating with mobile network operators directly to collect payment from users to enhance
channel efficiency and ultimately improve our gross margin; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | mobile network operators, whom we cooperate with in various aspects of our business, including the provision of customized software
services at their physical stores, distribution of applications and mobile content and payment collection. As of the date of this annual report, we have entered into strategic cooperation with all three dominate mobile network operators in China,
namely, China Mobile, China Unicom and China Telecom.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We share revenue from our Maopao platform with
handset manufacturers, mobile network operators, content providers and payment service providers. We believe that our revenue sharing approach aligns the interests of other industry participants with ours, motivates them to launch better products
and services and fosters a long-term mutually beneficial relationship with us. The below chart sets forth our current business model:





LOGO

We have grown substantially since we launched Maopao App Store for feature phones in 2006. There were
approximately 3,448.7 million, 2,619.1 million and 1,403.9 million downloads of applications and content titles from Maopao platform in the fiscal years ended March 31, 2012, 2013 and 2014, respectively.

Our Products and Services

We focus on providing entertainment-oriented applications and mobile content primarily through our Maopao App Store, complemented by a range of other Maopao platform applications that are popular among
our users, including Maopao Game Center, Maopao Community and Maopao Browser.



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Maopao App Store

Maopao App Store is a leading mobile application store in China in terms of user visits. Through Maopao App Store, our users can conveniently browse and download a wide variety of mobile games as well as
other applications and mobile content.

Maopao App Store enables:



| |  |  | handset companies to pre-install Maopao App Store onto smartphones and feature phones to enhance mobile phone features and user experience. It expands
the portfolios of mobile applications and content available to mobile phone users, enhancing the attractiveness of handsets;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | content providers to gain access to a large number of users and potential users without incurring significant marketing efforts or extensively
customizing their content for different handset models;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | users to conveniently browse and download mobile applications from Maopao App Store and purchase in-app virtual items, premium features and other
content from their handsets; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | us and other industry participants to collect payments from users through payment service providers, including mobile service providers, mobile network
operators and independent payment processing agents. The availability of these user-friendly payment channels incentivizes other industry participants by aligning their interest with ours via revenue sharing.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other Maopao Platform Products

Building upon the success of our Maopao App Store, we have developed a portfolio of Maopao platform products to further improve the functionality and user experience of smartphones and feature phones. Our
most downloaded Maopao platform applications include Maopao Game Center, Maopao Community and Maopao Browser.

Maopao Game
Center.Our dedicated game store, Maopao Game Center, features an extensive selection of mobile games sourced from third-party game publishers or developed in-house. We categorize these games by topic, popularity, date of release and various
other groupings for our users to conveniently browse, search and download.

Since 2012, we have been promoting, primarily
through our Maopao Game Center, an increasing number of light games, which are easy-to-play micropayment mobile games that do not require significant data usage or constant mobile network connection. Our light games primarily
target students and working-class frequent gamers with lower-end handsets and smaller data plans.

Maopao Community.
On our Maopao Community, members may create virtual profiles, befriend others who share similar ideas, interests or activities and view the profiles or track the status of their friends through blogs, pictures, instant messages and other social
networking functions. One of the most popular features of the Maopao Community is mobile social games, where our Maopao Community members interact with each other in the wireless game world. We operate these mobile social games on our own server
network through advanced cloud computing technology to ensure optimal user experience. We have launched Maopao Community for smartphones in May 2013 which maintains the user interface our feature phone users are accustomed to and enables feature
phone users to transfer their game status, virtual items and community contacts to Maopao Community installed on their smartphones. As of March 31, 2014, our Maopao Community attracted approximately 283.0 million registered members. Maopao
Community has served and is expected to continue to serve as an effective tool to retain and migrate our loyal Maopao Community users along with our transition to smartphones.

Maopao Browser. Our Maopao Browser offers mobile users the ability to locate vast amount of information available online. It also
features as-your-type suggestions, complemented with direct links to websites where relevant, and an automatically generated directory of popular websites and applications grouped by various categories for users to conveniently browse and access.

Applications and Content Available Through Maopao Platform

The main categories of mobile applications and content available through Maopao platform include:



| |  |  | multi-user applications, including multi-player games, such as mobile social games, and social network applications; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | single-user applications and content, including single-player games, multimedia applications and other single-user content.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



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In the fiscal years ended March 31, 2012, 2013 and 2014, our total number of
multi-user applications was 68, 598 and 1,582, respectively, and our total number of single-user applications and content titles offered on Maopao platform was 135,392, 469,256 and 378,955, respectively.

We organize the applications and content we offer based on popularity and functions, and update the user interface for each of our
Maopao platform products on a weekly basis to prioritize new and popular applications and content offerings. We actively position our content offerings on Maopao platform based on our analysis of statistical user behavior data and user preferences.
We aim to eliminate duplication and competition among the applications and content offered on our Maopao platform.

Most of
our games are free to download and play, and we generate revenues primarily from sales of in-game virtual items and premium features. Other applications and mobile content we offer on Maopao platform are generally free to download in an effort to
increase our customer base and loyalty. We intend to launch additional applications and content that complement our existing offerings based on future collaborative efforts with third parties and in-house development capabilities.

Multi-Player Games and Social Network Functions

We offer an expanding selection of multi-player games on our Maopao platform, such as multi-player role-playing games and multi-player version of popular card games and strategy games. Our most popular
multi-player games include Fantasy of Three Kingdoms, Armed Heroes Online and the Xian Jian Wen Qing.

Most of our
multi-player games are free to download and play. We charge users for each in-game purchase, such as performance-enhancement skills, weapons and accessories. For example, more than a hundred in-game virtual items are available for download in the
Fantasy of the Three Kingdoms, one of our most popular multi-player games, and each item typically costs RMB0.1 to RMB15.

We
offer a wide selection of social network tools on Maopao platform, including the mobile versions of popular Internet applications in China, such as QQ instant messenger and Weibo, as well as our own Maopao Community social network. We have a
strategic cooperative relationship with Weibo Corporation, a leading online media company and mobile value-added service provider in China, under which we promote its brand and products through our Maopao platform products and in return receive
commissions based on number of user registrations through our Maopao platform products.

In addition to our offerings in
Maopao App Store and Maopao Game Center, we offer a variety of mobile social games and social network functions, such as instant messaging, blogging, personal profiling, content sharing and virtual gifting, in our Maopao Community. We offer most
social network tools for free, but may charge for virtual gifts and other items, usually at RMB0.1 to RMB8 per item.

Single-Player
Games

Single-player games, such as card games, simple strategic games and action games, involve a single player and
usually relatively simple rules. We offered approximately 78,280 single-player games through Maopao App Store and Maopao Game Center during the fiscal year ended March 31, 2014 and attracted approximately 548.6 million downloads. Our
most popular single-player games include Raging Sharks, a leisure game, and Infinity Wars, a tower defense card game.

Most
of our single-user games are free to download and play. We usually charge RMB2 to RMB10 for each in-game purchase, such as performance-enhancement skills, weapons and accessories. On our feature phone Maopao App Store, for some single-player games,
we charge a one-time subscription fee for unlimited access over a period of time, typically less than one month. We also introduce special offers where mobile phone users can download a bundle of single-player games at a discount.

Other Single-User Mobile Applications

Users can access a broad range of other applications through Maopao platform. Some of the most popular applications include video players, music players, screen lockers, instant maps, real-time stock
quotes and analysis, weather, network clock and electronic dictionary. We offer most of these applications for free.

Content Sourcing and
Management

The popularity and success of our Maopao platform depends on the quality of applications and content we offer,
a substantial majority of which are sourced from third-party content providers. We have also developed certain applications in-house that are popular among our users, such as our mobile book reader, mobile music player, single-player games and
social network applications. Leveraging our statistical user behavior data and user feedback, we provide our in-house development team and content providers with suggestions and guidance to develop quality applications and content that address our
users varying needs and interests.



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We selectively collaborate with content providers and had entered into licensing agreements
with over 200 content providers as of March 31, 2014. Our content providers include some of the largest Internet companies in China, such as Baidu and many independent content developers, as well as certain of our mobile service providers and
mobile network operators who offer their mobile applications and content through Maopao platform. We select content providers based on their reputation and track record and the needs, preferences and interests of mobile users and handset companies.

We strive to maintain close relationships with our content providers and motivate them to continuously introduce appealing
applications through Maopao platform. Maopao platform effectively extends the customer reach of our content providers, enabling them to design content that can be delivered to handsets with a myriad of hardware and operation system configurations
without significant marketing spending or extensive customization for different handset models.

In order to diversify our
mobile games offerings and further expand our user base, we have been promoting an increasing number of light games since 2012, primarily through our Maopao Game Center, which target students and working-class frequent gamers with
lower-end handsets and smaller data plans. Light games are easy-to-play micropayment mobile games that do not require significant data usage or constant mobile network connection. We expect the growth of our light gaming business to
enable us to develop relationships with additional small and mid-size mobile game developers, which account for a large percentage of our content providers.

Contract Terms with Content Providers

We typically enter into
exclusive or non-exclusive licensing agreements with a term of one to three years with selected third-party content providers and share with them a percentage of revenue or a fixed fee based on number of activations. To incentivize developers
investment in certain applications that may require substantial resources and a longer development cycle, such as multi-player games, we sometimes pay content developers a minimum guaranteed amount in advance to cover part of their development costs
in addition to revenue sharing with them once launched.

Support to Content Providers

We emphasize cooperating with content providers. We license our standard software development kits and related tool suites for free to
encourage content providers to develop content in our proprietary format. We have designed our standard software development kits and related tool suites with modularized functions to allow content providers to focus on content creation and
improvements without concerns over compatibility with handset hardware, software or network environments. This simplifies our content providers development process and shortens their time-to-market.

We have also established a standardized process to assist content providers to develop and launch applications and content. Our
specialized content provider support team assists content providers in better utilizing our development tools and accelerating their development process. Our field engineers, some of whom are temporarily stationed at the offices of content
providers, assist content providers with project management and other technical aspects of application development. For example, our field engineers provide technical support to content providers developing applications and content for the 3G
network environment. We also work with selected content providers to test applications and content before launching them on Maopao platform. After launching an application or content title on Maopao platform, we give suggestions to content providers
to improve their applications and content based on user feedback. We believe these efforts facilitate the development process of our content providers and enhance our relationship with them. We also host industry events and sponsor large industry
conferences for the content developer community, such as the 3G Application Software Forum we held in Hangzhou in February 2010 and the Global Mobile Internet Conference we sponsored in May 2012, May 2013 and May 2014. We believe our close
collaboration with content providers has well positioned us to offer creative and well-integrated digital lifestyle and entertainment solutions to our users.

Cooperation with Handset Companies

We primarily promote our Maopao
platform by collaborating with handset companies, including handset manufacturers and independent design houses, to pre-install our Maopao platform products in their mobile handsets. We believe that, in the highly fragmented and competitive handset
market in China, pre-installation of a mobile application onto handsets before they reach mobile users is a highly effective way for a mobile application to achieve success.



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We have formed strong collaborative relationships with handset companies to embed our
Maopao platform products for different types of mobile baseband, chipsets and reference designs. We have cooperated with over 250 smartphone and 800 feature phone handset companies as of March 31, 2014. The handset companies we collaborate with
include branded handset manufacturers such as K-Touch, Coolpad, Konka, ZTE, Gionee and OPPO, as well as independent design houses such as Topwise and Water World. We select handset companies based on their reputation, development capabilities and
market share and geographic reach of their handsets.

Pursuant to our agreements with handset companies, which typically have
two-year terms and contain automatic renewal provisions, we generally pay handset companies a percentage of the revenues generated from user purchases within the pre-installed applications or a fixed amount based on number of activations. Handset
companies also place high value on our content selection which is based on years of analysis of statistical data obtained from an extensive user base and an insight into market trends and user preferences. Pre-installing Maopao platform products
that cater to handset customers needs and interests enhances the functionality and user experience of mobile handsets and helps promote handset sales.

In addition, collaboration with us enables handset companies to take advantage of our large user base and economics of scale to reduce development costs and costs associated with negotiating with
individual content providers and payment processing agents. We work closely with handset companies to develop new handset features and optimize the operating environment of individual handset models. Our knowledge of their handset designs and
functions in turn helps us to develop our Maopao platform products to better utilize the hardware and software resources of mobile handsets. We believe we have built a reputation among handset companies on our competitive value proposition and track
record.

Cooperation with Mobile Network Operators

We have established strategic cooperation with all three dominant mobile network operators in China, namely China Mobile, China Unicom and China Telecom and collaborate with them in various aspects of our
business.

Pre-installation. We contract with each of China Mobile and China Unicom to pre-install a wide range of
applications that appeal to customers at their physical stores nationwide and share with them a percentage of revenue generated from the pre-installed applications. In March 2014, we entered into a strategic partnership with the Wo Store of China
Unicom, the official application store of Chinas second largest mobile network operator. Under this partnership, China Unicom designated us as its official business partner to provide customized software services through China Unicoms
extensive network of physical stores. As of March 31, 2014, this strategic partnership covered China Unicoms physical stores in the fast growing smartphone markets of Zhejiang, Guangxi and Shandong provinces. We have designed and
developed specifically for mobile network operators a smartphone assistant software, Mopin Smartphone Assistant, which provides a one-stop solution for the installation of various smartphone applications that cater to different customer demographics
at the time a customer purchases smartphones at physical stores of mobile network operators. In addition, Mopin Smartphone Assistant enables mobile network operators to track and analyze user download and purchases, which helps promote their mobile
data plans and enhance their customer services.

Payment collection services. Each of China Mobile, China Unicom and
China Telecom has granted us access to their payment channels for us to collect sales proceeds from them directly without using mobile service providers as intermediaries, thus effectively reducing our payment channel costs.

Mobile content distribution services. We have entered into partnership agreements with China Mobile, pursuant to which we offer
China Mobiles mobile games and mobile reading application on Maopao platform and share with them a percentage of revenue based on user purchases of China Mobiles in-game virtual items, premium features and reading content from Maopao
platform. In addition, we distribute our licensed games and reading content through China Mobiles mobile games and mobile reading channels.

We plan to intensify our cooperation with mobile network operators to increase our user base, benefit from lower payment channel costs and faster payment collection and supplement our mobile application
and content offerings.

Payment Channels

Mobile Service Providers

We rely primarily on mobile service
providers for payment collection. In the fiscal years ended March 31, 2012, 2013 and 2014, we collected a large portion of our revenues through the billing channels of mobile service providers, who have access to mobile network operators
payment channels pursuant to their respective agreements with mobile network operators. After a mobile user confirms his or her purchase of in-app virtual items, premium features or other content, Maopao platform prompts the user to send an SMS to
one of our selected mobile service providers, who will then send the user a confirmation SMS with transaction details and a simultaneous message to the mobile network operator. Upon receipt of the confirmation SMS, the mobile network operator
records the transaction and bills the user.



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Our relationships with mobile service providers are critical to our payment collection. As
of March 31, 2014, we had entered into agreements with over 40 mobile service providers. We select mobile service providers based on their network coverage, service quality, proceeds sharing arrangements and track record of payment collection.
Our agreements with mobile service providers generally have terms of one to three years without automatic renewal provisions. We generally share with mobile service providers a percentage of the payments they collect, which are net of the fees they
pay to mobile network operators. We receive settlement statements from mobile service providers on a monthly basis, which indicate the aggregate amount of fees that were charged to users for purchases through Maopao platform.

Our mobile service providers depend on mobile network operators for billing and collection services. See Item 3. Key Information
 D. Risk Factors  Risks Related to Our Business and Our Industry  We depend on mobile service providers, and ultimately mobile network operators, for the collection of a substantial majority of our revenues, and any loss
of or deterioration in our relationships with mobile service providers, or a disruption in our mobile service providers relationships with mobile network operators, may result in severe disruptions to our operations and loss of revenues.

Certain mobile service providers, such as Kongzhong, also distribute content through Maopao platform, which further enhances
our relationships with them. For the mobile service providers who distribute their applications and content through Maopao platform, we usually charge a commission at a percentage of their revenues.

Mobile Network Providers

We have been granted access to the payment channels of all three dominant mobile network providers in China, which enables us to collect payment directly from them without using mobile service providers
as intermediaries. See Cooperation with Mobile Network Providers.

Third-party Payment Channels

In addition to mobile service providers and mobile network operators billing channels, we offer a variety of other payment options
to our users, including game cards of third-party companies such as Giant Interactive, Netease, Perfect World and Shanda, other prepaid cards, bank remittance, China Post, and virtual currency such as QQ Currency, among others. Users may use
game cards or other prepaid cards to make purchases in our Maopao Community. For these payment channels, we usually collect through independent payment processing agents and share a percentage of proceeds with them, which is usually lower than the
commission we pay mobile service providers. Our agreements with the independent payment processing agents generally have terms of one year with automatic renewal provisions.

Sales and Marketing

We aim to increase sales by continuously introducing
applications and content that appeal to our users, increasing our users purchasing frequency and average spending. Our market research team keeps abreast of the latest market trends and user preferences by analyzing user statistical data and
provide content development suggestions to third-party content providers and our in-house development team on a real-time basis. We market and promote Maopao App Store and our applications and other content to users through the following channels.



| |  |  | Pre-installation. We primarily promote our Maopao platform by collaborating with handset companies, including handset manufacturers and
independent design houses, to pre-install our Maopao platform products in their handsets. We emphasize maintaining close relationships with handset companies to increase the number of mobile handsets pre-installing Maopao platform products. As of
March 31, 2014, we have cooperated with over 250 smartphone and 800 feature phone handset companies. We are also developing relationships with additional handset companies to further extend our user reach. In addition, we collaborate with China
Mobile and China Unicom to pre-install our Maopao platform applications at their physical stores nationwide.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Advertising and promotions.We regularly introduce sales events based on certain themes and grouping similar applications and content into
packages. We have implemented a Talented User program, under which some of our users who are familiar with Maopao platform and its applications and content recommend and promote applications and content to other users in forums that discuss
frequently asked questions about Maopao platform. We also attend and sponsor various industry events and conferences, such as the Global Mobile Internet Conference in May 2014 in Beijing, China and the Daiwa Hong Kong China Investment Seminar 2014
in June 2014 in Tokyo, Japan, to introduce our Maopao platform products to potential users and business partners and increase product visibility internationally.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Prior to launching new applications and content, we usually conduct test marketing by
offering the new applications or content to selected users. We analyze user purchases and feedback to forecast demand, growth potential and acceptable price range of the applications and content, and plan our launch and marketing accordingly to
enhance marketing efficiency.

International Expansion

We believe we are well-equipped to expand into overseas markets with a large number of users of China-manufactured mobile handsets, such as India, Indonesia, Malaysia and other emerging markets in
Southeast Asia and South America and have already initiated our expansion efforts in these markets. We have identified key mobile market participants, including local mobile network operators, content providers and handset manufacturers in these
markets and have integrated them into our global network. We have a dedicated research and development and sales team covering each of our major overseas markets and we have translated the user interface of many of our single-player games and other
applications into local languages, including English, Hindi and Thai.

We will continue to collaborate with China-based
handset companies to have Maopao platform products pre-installed onto their handsets for export.

Operation of Maopao Platform

Maopao platform is operated on our network infrastructure of over 1,000 computer servers. Our network infrastructure
automatically reports any detected malfunctions on a real-time basis to our network control center, which allows us to quickly respond to and resolve issues to ensure the stability and security of our network.

Our operations team, which consisted of 94 employees as of March 31, 2014, is responsible for the operation of applications and
other mobile content available on Maopao platform. They ensure the proper functioning of wireless connection and data transmission systems and application features, initiate remediation processes once bugs or other defects are detected and provide
application updates for users to download. Our operations team also polices against rampant piracy in China, which allows users to bypass mobile application stores, damaging the operations and reputation of application store operators, content
providers and other industry participants. We regularly analyze the download and billing records of handsets using Maopao platform in order to detect piracy.

Customer Service

We place high value on quality customer services.
We have an in-house call center and a website forum that provide real-time assistance to Maopao platform users. Our in-house call center provides customer service 24 hours a day, seven days a week.

Our customer service representatives are trained to address user inquires and complaints and educate users and potential users about
Maopao platform products. We actively monitor user complaints and provide feedback to content providers to identify and address potential issues. We were granted the Golden Ear Microphone Award by Customer Care & Management
World Group in 2011 for our call center providing the best customer experience.

We endeavor to hire qualified customer
representatives and regularly evaluate their performance. Each customer representative completes monthly mandatory training conducted by experienced managers on product knowledge, service attitude, complaint handling and communication skills.

Our Technologies

We have focused on and will continue to invest in our technologies, which help us connect the various resources of the mobile application ecosystem and deliver superior user experience. Our technologies
enable users to search and download an expanding collection of applications and purchase virtual items, premium features and other content that cater to their varying interests on a platform that is highly scalable and reliable. We believe Maopao
platform and related technologies provide practical solutions to the problems facing mobile application providers in China.



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Data Mining and Big Data Analytic Technologies

We apply big data analytic technologies to ensure the quality of our Maopao platform products, enhance user experience and achieve higher
user engagement and monetization. Leveraging our advanced data mining and big data analytic capabilities, we are able to extract, process and analyze a vast and growing amount of user behavior and preference data, such as user demographics,
preferred log-in time, in-app activity levels, purchase patterns and effectiveness of promotional activities, to identify applications and content that our users will be most interested in. By comparing the user behavior and preference data we have
compiled against an index of user-specific parameters, our personalized recommendation engine provides real-time tailored mobile application recommendations that appeal to each individual user.

Cloud Computing Platform

Our cloud computing platform, Maopao Cloud Services, is a distributed computing platform tailored for mobile gaming business. It is built with proprietary technology that enables servers clusters to
perform with enhanced computing power and higher stability to facilitate the low-latency and long running time of mobile games. Maopao Cloud Services offers a suite of cloud services such as elastic computing, database storage and services and
large-scale data processing. It identifies the most efficient and stable connection in our network for each task which enables real-time dynamic allocation of our servers, bandwidth and other resources to support the requirements of our users and
content providers.

Content Delivery Network

By integrating our proprietary content distribution network with third-party content delivery networks, we have built in a distributed, load-balanced mobile application distribution system based on
cloud-based infrastructure and distributed storage technologies that achieves high availability at high speed. This system allows heavy traffic on our Maopao platform to be redistributed to different servers based on the processing capability of
each server to minimize our users waiting time. Designed specifically for a large Chinese mobile user base that is geographically dispersed, this infrastructure can be expanded easily as data storage and user visits increase and is optimized
to handle small files, fragmented small file retrieval and remote backup.

Compatibility with Mobile Handsets

Chinas mobile handset market is characterized by the fragmentation of handset hardware, ranging from economic feature phones
designed for basic telecommunication functions to top-of-the-line smartphone models. A successful mobile application must be compatible with such diversified hardware, as well as a myriad of operating systems and other software available on handsets
in China.

Maopao platform is designed to be compatible with or customized for all mainstream handset development hardware
and software and to facilitate the operation of individual applications on various mobile operating systems. With our familiarity of various handset models in China through our cooperation with handset companies and involvement in their handset
design process, we design Maopao platform products to better utilize the resources of popular handset models hardware and software and bypass their system bottlenecks, enhancing the performance of our applications and content in the actual
operative environment.

Connectivity with Mobile Networks

Chinas mobile network environment also presents challenges to mobile application providers. Each of the three dominant mobile
network operators has numerous provincial subsidiaries operating local networks in their respective regions. Therefore, a national mobile application provider must deal with diverse network operating environments. Utilizing our core development
teams experience in telecommunications networking, we have a good grasp of the local network operating environments in different regions in China, including their connectivity, interconnection among different networks and their respective fee
standards.

Maopao platform is designed to make the best use of network resources, accommodating varying network operating
conditions. For example, when users use the applications and content on Maopao platform, Maopao platform automatically detects local network conditions, lists network connection alternatives and selects the optimal connection solution. When
connecting to a local wireless network with data transmission problems, our built-in algorithms will minimize data error during transmission.

Digital Rights Management

Maopao platform is designed to protect against piracy. Unlike other application stores that rely on open source software like Java based programs, our proprietary MRP format has built-in encryption
features for content-protection and secured billing. Each mobile handset installing Maopao platform products is assigned with an individual computing method for its billing records. Even if hackers attack a handset, the impact is usually limited to
that specific handset.



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Scalable Hardware Infrastructure

Each physical server in our infrastructure network functions as a virtualized central server, which supports simultaneous mobile
application access by approximately one million mobile users. We utilize this technological foundation for mass computing and operational stability, supporting most sophisticated applications such as multi-player games and complicated social network
functions.

Single Socket Solution and Easy Upgrade Process

We implement a single socket solution, which significantly improves wireless data transmission speed and application stability. Unlike
certain other mobile application stores that require users to open a socket for each application, our single-socket approach saves users the time and resources needed for opening and closing different sockets and switching among sockets. Maopao
platform and the cloud computing at our servers allow the concurrent operation of several functions through one socket on a given handset.

For certain applications, such as multi-player games, users generally have to reload the entire application for application upgrades, which drastically slows down the application and compromises user
experience. Maopao platform simplifies the upgrade process by reloading only the part of the applications that requires upgrade, significantly reducing the reloading time.

Competition

The mobile application market in China is fast evolving and
highly competitive. The market is characterized by frequent introduction of new products and services, short product life cycles, evolving industry standards, regular improvement in performance characteristics, rapid adoption of technological and
product advancements, user price sensitivity and aggressive price cutting by competitors with resulting downward pressure on gross margins. We compete with:



| |  |  | other independent application store operators;
| | - |  | ----------------------------------------------



| |  |  | handset companies, mobile service providers, mobile operating systems and other industry participants that have developed or may develop their own
application stores;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | large Chinese Internet companies that may develop their own mobile application stores, applications or other mobile content; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | other mobile application distributors and other content providers, such as mobile game distributors.
| | - |  | ----------------------------------------------------------------------------------------------------

Our major competitors include Baidus 91 Wireless, Tencent, Qihoo 360 and Wandoujia. We may also face alliances between our
existing and new competitors. New competitors may also emerge. Some of our competitors or potential competitors may have greater development experience and resources than we have. We compete primarily on the basis of user base, relationships with
mobile handset companies, mobile network operators, mobile service providers and mobile network operators, key technologies and research and development capabilities. For a discussion of risks relating to the mobile application market in China, see
Item 3. Key Information  D. Risk Factors  Risks Related to Our Business and Our Industry  We may face increased competition, which could reduce our market share and materially adversely affect our results of
operations.

Intellectual Property

We regard our copyrights, trademarks, trade secrets and other intellectual property critical to our success, and rely on a combination of trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with our employees, content providers and others to protect our proprietary rights. Our research and development personnel have entered into confidentiality and proprietary information agreements or
agreements containing confidentiality and proprietary clauses with us, pursuant to which they are required to assign to us all of the inventions, designs and technologies they develop during their employment with us.

Licenses from Third Parties

While we develop certain applications in-house, a majority of the applications and content offered on our Maopao platform are developed by and sourced from third-party content developers. We selectively
collaborate with content providers and had entered into licensing agreements with over 200 content providers as of March 31, 2014. Under the license agreements, we generally share a percentage of revenue with the content developers or pay a
fixed fee based on number of activations. We sometimes pay content providers a minimum guaranteed amount in advance to cover part of their development costs in addition to revenue sharing.



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Trademarks, Trade Names, Copyrights and Domain Names

As of the date of this annual report, we have applied for the registration of the LOGOLOGO trademarks in China. We have obtained 110 copyright registrations for software we developed, including development tools for our MRP format, as well as our Maopao platform products. In addition, we have registered
91 domain names, including sky-mobi.com and 51mrp.com, our primary websites.

While we actively protect our proprietary
rights, these efforts may not be adequate to prevent the infringement or misappropriation of our intellectual property. This is particularly the case in China, where intellectual property laws may not protect our proprietary rights as fully as in
the United States. Infringement or misappropriation of our intellectual property could materially harm our business.

In
addition, our product offerings may infringe patents, copyrights or other intellectual property rights held by third parties, subjecting us to legal proceedings and claims, see Item 3. Key Information  D. Risk Factors 
Risks Related to Our Business and Our Industry  Our results of operations, financial performance and business may be adversely affected by potential intellectual property rights infringement claims against us.

Seasonality

Our
results of operations may be affected by seasonal trends caused by user behavior and demand for our applications and content offerings. Our revenues are generally higher during holiday seasons, when users tend to download more applications and
content from Maopao platform and incur higher purchases. Such seasonality has appeared less prominent in recent periods as our user base continue to increase.

Insurance

We maintain directors and officers liability insurance and do
not maintain any property insurance other than insurance for our vehicles. Consistent with industry practice in China, we do not maintain business interruption insurance. Damage to any of our equipment or buildings or a significant product liability
claim that is not covered by our insurance policies could have a material adverse effect on our results of operations. See Item 3. Key Information  D. Risk Factors  Risks Related to Our Business and Our
Industry  We have limited insurance coverage, which could expose us to significant costs and business disruption.

Regulations

Regulation of the
Telecommunications Industry

Telecommunications Services

On September 25, 2000, the State Council of the PRC, or the State Council, issued the Regulations on Telecommunications of the PRC,
or the Regulations on Telecommunications, which regulate the telecommunications industry and related activities and services in the PRC. The MIIT (formerly the Ministry of Information Industry, or the MII) regulates the telecommunications industry
on a national level and the relevant provincial-level communications administrative bureaus, or the CABs, supervise and regulate the telecommunications industry in their respective administrative regions.

The Regulations on Telecommunications classify telecommunications services into two main categories: (1) basic telecommunications
services and (2) telecommunications value-added services, and further divide each main category into several sub-categories. According to the Catalog for Classification of Telecommunications Businesses, which became effective on April 1,
2003, our business constitutes provision of information services through mobile networks and the Internet, and is classified in the category of telecommunications value-added services.

The provision of telecommunications value-added services in the PRC is subject to the examination and approval of, and requires a
license issued by, the MIIT or the relevant CABs. On March 1, 2009, the MIIT issued the Administrative Measures for the Licensing of Telecommunications Business Operations, which set forth the basic requirements that an applicant must satisfy
when applying for a license to provide telecommunications value-added services in the PRC. Such requirements include the following:



| |  |  | the applicant is a duly incorporated company;
| | - |  | ---------------------------------------------



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| |  |  | the applicant has the necessary funds and professional staff suitable for its business activities;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | the applicant has the reputation or capability to provide customers with long-term services;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | to operate telecommunications value-added services business across two or more provinces, autonomous regions or centrally administered municipalities,
the applicant should have a minimum registered capital of RMB10.0 million; to operate telecommunications value-added services business within one province, autonomous region or centrally administered municipality only, the applicant should have a
minimum registered capital of RMB1.0 million;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the applicant has the necessary premises, facilities and technical scheme; and
| | - |  | ------------------------------------------------------------------------------



| |  |  | the applicant and its major capital contributors and business managers have no record of violating rules of the telecommunication supervision and
administration during the past three years.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Provision of telecommunications value-added services across
two or more provinces, autonomous regions or centrally administered municipalities requires the approval of the MIIT and a Trans-regional Telecommunications Value-added Services Operation License issued by the MIIT. Provision of such services to one
province, autonomous region or centrally administered municipality requires only the approval of the relevant CAB, which will issue a Telecommunications Value-added Services Operation License. We provide our telecommunications services from Zhejiang
province only and we do not have servers in other parts of China. As such, we only need the approval of the Zhejiang CAB. Each of Hangzhou Sky, Mijia, Fanyi, Feineng, Miyi and Najia has been granted a Telecommunications Value-added Services
Operation License by Zhejiang CAB.

On March 13, 2005, the MII issued the Specifications for Telecommunications
Services, which specify the telecommunications service standards to which telecommunications service providers in the PRC should conform. It also requires telecommunications services providers to establish a sound service quality management system
and make periodic reports to the relevant telecommunications authorities.

Foreign Investments in the Telecommunications
Value-added Services Industry

Foreign direct investment in the telecommunications services industry in China is regulated
by the Regulations on the Administration of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations, issued by the State Council on December 11, 2001 and amended by the State Council on September 10, 2008. According to the
FITE Regulations, a foreign investors ultimate equity interests in any entity providing telecommunications value-added services in the PRC may not exceed 50% and a foreign investor wishing to acquire any equity interest in a telecommunications
value-added services business in the PRC must demonstrate a good track record and prior experience in providing telecommunications value-added services outside the PRC.

On July 13, 2006, the MII issued the Notice Regarding Strengthening Administration of Foreign Investment in Operating Telecommunications Value-Added Businesses, or the MII Notice, which prohibits
holders of telecommunications value-added services operating licenses, including Trans-regional Telecommunications Value-added Services Operation Licenses and Telecommunications Value-added Services Operation Licenses, from leasing, transferring or
selling their licenses to any foreign investors in any manner, or providing any resources, premises or facilities to any foreign investors for illegal operation of telecommunications services businesses in the PRC.

The MII Notice also requires that (1) holders of telecommunications value-added services operation licenses or their shareholders
must directly own the domain names and trademarks used by such license holders in their daily operations; (2) each license holder must have the necessary facilities for its approved business operations and maintain such facilities in the
regions covered by its license; and (3) all value-added telecommunications service providers maintain network and Internet security in accordance with the standards set forth in relevant PRC regulations. If a license holder fails to comply with
the requirements in the MII Notice and fails to remedy such non-compliance within a designated period, the MIIT or relevant CABs may take administrative actions against such license holders, including revoking their telecommunications valued-added
services operation licenses. We provide our services through our controlled SPEs that own Telecommunications Value-added Services Operation Licenses.

Regulation of the Software Development Industry

Software
Development

On October 16, 2000, the MII, Ministry of Education, Ministry of Science and Technology and the State
Administration of Taxation, or SAT, promulgated the Certifying Standards and Administrative Measures for Software Enterprises (Proposed), which specify the certifying standards of software enterprises, including:



| |  |  | the applicant must be an enterprise established in the PRC that engages in the business of computer software development and production, system
integration or application service, or similar activities;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | the enterprise develops one or more software products or possesses intellectual property rights for such products, or provides technical services such
as computer information system integration that has passed qualification and grade certification;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the proportion of technical staff working in software development and technical service must not be less than 50% of the total staff in the enterprise;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the development fund for software techniques and products must be over 8% of the enterprises annual income from software; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | the annual sale income from software sales must be over 35% of the total annual income of the enterprise, with the income of self-developed software
over 50% of the software sales income.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Enterprises that are qualified as software enterprises
are entitled to certain preferential policies in the PRC. According to the Circular on Relevant Policies for Encouraging the Development of the Software and Integrated Circuit Industries, or Circular No. 25, issued by the Ministry of
Finance and SAT, newly-established software development enterprises (i.e., those established after July 1, 2001) may be exempted from income tax in the first two years of profitability and pay income taxes at half the standard rate for the next
three years. According to the Circular on Relevant Policies for Further Encouraging the Development of the Software and Integrated Circuit Industries (No. 27 (2012)), issued by the Ministry of Finance, a revised and updated version of Circular
No. 25, enterprises which enjoyed preferential treatment under Circular No. 25 before December 31, 2010 may continue to enjoy preferential treatment until the expiration of the original five-year period.

On February 22, 2008, the Ministry of Finance and SAT promulgated the Notice on Several Preferential Policies in Respect of
Enterprise Income Tax, or Notice 2008 No. 1, reiterating the policy that a software enterprise newly established within China may, upon determination, be exempted from income taxes for its first two profit-making years and will be subject to
income tax at half the standard rate for the next three years. On April 24, 2009, the Ministry of Finance and SAT promulgated the Notice on Several Issues Relevant to the Implementation of the Preferential Policies on Enterprise Income Tax,
which states that software enterprises and integrated circuit production enterprises established prior to the end of 2007 may, upon certification, enjoy the preferential policies on EIT reductions and exemptions within specified periods as provided
in the Notice 2008 No. 1. An enterprise that made profits in 2007 or in the years preceding 2007 and started enjoying the EIT reductions and exemptions within specified periods may enjoy the relevant preferential policies from 2008 until the
expiration of the specified periods.

The software development enterprise certification is subject to annual examination.
Hangzhou Sky was granted a software enterprise certification on December 14, 2007, and passed the annual inspection for 2008 and 2009. It enjoyed the preferential income tax policy, i.e., income tax exemption for the first two profit-making
years (i.e., 2008 and 2009), and a reduced rate for the next three years.

On March 5, 2009, the MIIT issued the
Administrative Measures for Software Products, or the Measures for Software Products, to regulate the development, production, sale and import of software products, including computer software, software embedded in information systems and equipment,
and computer software provided in conjunction with other information or technology services. The Measures for Software Products forbid the development, production, sale and import of software products that infringe intellectual property rights of
third parties, contain computer viruses, harm computer system security or contain content prohibited by PRC law.

The
Measures for Software Products require registration and filing of software products with provincial level software registration institutions authorized to accept and review software products registration applications. Once accepted for review, the
software product registration application will be publicly announced, and if no objection is received within a seven-working-day publication period, a software registration number and a software product registration certificate will be granted. A
software registration certificate is valid for five years and may be renewed upon expiration.

Foreign Investments in the
Software Development Industry

According to the Catalogue of Industries for Guiding Foreign Investment, amended in 2011,
foreign investment is encouraged in the sector of software development and production. As such, there are no restrictions on foreign investment in the software development industry in the PRC aside from requirements to obtain business licenses and
other permits that every software developer in the PRC must obtain.



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Regulation of Intellectual Property Rights

Trademarks

Registered trademarks in the PRC are protected by the Trademark Law of the PRC, which came into effect in 1982 and was revised in 1993 and 2001. A trademark can be registered in the PRC with the Trademark
Office under the State Administration for Industry and Commerce. The protection period for a registered trademark in the PRC is ten years starting from the registration date and may be renewed if an application for renewal is filed within six months
prior to expiration.

Copyright

Copyright in the PRC is protected by the Copyright Law of the PRC, which was promulgated in 1990 and revised in 2001 and 2010. Under the revised Copyright Law, copyright protection has been extended to
information networks and products transmitted on information networks. Copyrights are reserved by the author, unless otherwise specified by law. According to Article 16 of the Copyright Law, if a work constitutes work for hire, the
employer, instead of the employee, is considered the legal author of the work and will enjoy the copyrights of such work for hire other than rights of authorship.

Works for hire include (1) drawings of engineering designs and product designs, maps, computer software and other works for hire, which are created mainly with the materials and technical
resources of the legal entity or organization with responsibilities being assumed by such legal entity or organization and (2) those works the copyrights of which are, in accordance with the laws or administrative regulations or under
contractual arrangements, enjoyed by a legal entity or organization. The actual creator may enjoy the rights of authorship of such work for hire.

A copyright owner may transfer its copyrights to others or permit others to use its copyrighted works. Use of copyrighted works of others generally requires a license from the copyright owner. The
protection period for copyrights in the PRC varies, with 50 years as the minimum period of protection. The protection period for a work for hire for which a legal entity or organization owns the copyright (except for the right of
authorship) is 50 years, expiring on December 31 of the fiftieth year after the first publication of such work.

In
China, computer software copyrights are protected by the Copyright Law. The State Council and the State Copyright Administration of the PRC have promulgated various regulations relating to the protection of software copyrights in China. Under these
regulations, computer software that is independently developed and exists in a physical form is protected, and a software copyright owner may license or transfer its software copyrights to others. Registration of software copyrights, exclusive
licenses and transfer contracts with the Copyright Protection Center of China (previously, the State Copyright Administration) or its local branches is encouraged.

Although such registration is not mandatory under PRC law, it provides owners with more protection. On January 16, 2013, the State Council issued the Decision of the State Council on Revising the
Regulations for the Protection of Computer Software (Order No. 632), which became effective on March 1, 2013. Order No. 632 increases fines for the following actions.



| | (1) | Reproducing in full or in part a copyright owners software;
| | --- | ------------------------------------------------------------



| | (2) | Distributing, renting, or disseminating via an information network a copyright owners software to the public;
| | --- | --------------------------------------------------------------------------------------------------------------



| | (3) | Intentionally evading or disabling a copyright owners technical measures for protecting the software copyright thereof;
| | --- | ------------------------------------------------------------------------------------------------------------------------



| | (4) | Intentionally deleting or modifying electronic information on software rights management; or
| | --- | --------------------------------------------------------------------------------------------



| | (5) | Transferring, or granting license, to others the right to exercise a copyright owners software copyright.
| | --- | ----------------------------------------------------------------------------------------------------------

Under the circumstances specified in Item (1) or Item (2) of the previous paragraph, a fine of RMB 100 per item or a fine
of between one and five times the value of the goods may be imposed (in addition to the sanctions initially imposed by the original regulations); under the circumstances specified in Item (3), Item (4) or Item (5) of the previous
paragraph, a fine of less than RMB 200,000 may be imposed (in addition to the sanctions initially imposed by the original regulations).



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Regulation of the Internet

Internet domain names

Internet domain names in the PRC are regulated by the Administrative Measures on the PRC Internet Domain Name, which were promulgated by the MII and came into effect on December 20, 2004, and the
Implementation Rules of Registration of Domain Name, which was promulgated by PRCs domain name registrar, the China Internet Network Information Centre, and came into effect on December 1, 2002.

Domain name service organizations accept applications for network domain names and domain name registration applicants become holders of
the registered domain or name after registration. A holder needs to pay operation fees on time to keep its registered domain name or the domain name registrar may revoke the domain name. In case any registration information of a domain name changes,
the holder must file the change with the domain name registrar within 30 days after such change.

CNNIC is responsible for
the administration of .cn domain names and Chinese domain names. Disputes in respect of domain names are regulated by the Measures on Resolution of Disputes regarding Domain Names, which was issued by CNNIC and revised on February 14, 2006.
Organizations approved by the CNNIC settle such disputes.

Provision of Internet Information Services

Provision of Internet information services in the PRC is regulated by the Administrative Measures on Internet Information Services,
adopted by the State Council on September 20, 2000. According to these measures, provision of Internet information services regarding news, publication, education, medicine and health care, pharmacies and medical appliances is subject to
examination, approval and regulation by relevant authorities responsible for regulating these sectors. Electronic bulletin services also require special applications and filings in accordance with relevant regulations (as described below).

Internet content providers are not allowed to provide services beyond the scope of the content that has been licensed or
registered. The measures also provide a list of prohibited content on the Internet. Internet information service providers are required to monitor and censor the information on their websites, and when prohibited content is found, they should
terminate the transmission immediately, keep relevant records and report the prohibited content immediately to relevant authorities.

According to these measures, commercial Internet information service providers must obtain a License for Internet Content Providers, or ICP license.

On February 17, 2011, the MOC issued the Provisional Regulations for the Administration of Internet Culture, or the Internet
Culture Regulations, which took effect on April 1, 2011 and replaced the Provisional Regulations for the Administration of Internet Culture, which were issued by the MOC on May 10, 2003 and were amended on June 2, 2004.

The Internet Culture Regulations apply to entities engaging in activities related to Internet cultural products, including
music and video files, network games, animation features and audiovisual products, performed plays and artwork converted for dissemination via the internet. Pursuant to these regulations, commercial entities are required to apply to the relevant
local branch of the MOC for an Internet Culture Operating Permit if they engage in any of the following types of activities:



| |  |  | the production, duplication, importation, wholesale, retail, leasing or broadcasting of Internet cultural products;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | the dissemination of Internet cultural products on the Internet or transmission thereof to (i) client end devices such as computers, fixed-line or
mobile phones, television sets or gaming consoles and (ii) places offering internet access services, such as internet cafes, for the purpose of browsing, reading, using or downloading such products; or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the exhibition or holding of contests related to Internet cultural products.
| | - |  | ----------------------------------------------------------------------------

Online Games

On June 3, 2010, the MOC issued the Tentative Rule on Administration of Online Games, or the Rule on Online Games, effective as of August 1, 2010. According to the Rule on Online Games,
companies that plan to operate online games, issue virtual currency and provide virtual currency transaction services must obtain a license from the provincial counterpart of the MOC. The MOC is responsible for reviewing the content of online games.
Online game operators are also required to establish a self-censorship mechanism and ensure the lawfulness of the content of their games and corporate operations. In addition, the Rule on Online Games provides that all domestic online games must be
filed with MOC, and all imported online games must be approved by the MOC.

Online game operators must provide instructions
to users and necessary warnings regarding content, functions and targeted players of online games, and display them conspicuously on their website and in the games. Online games targeting minors must not include any content that allures minors to
imitate behavior undermining public morality or instigate crimes, or any content which is harmful to minors health, such as content depicting terror or cruelty.



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Online game operators must take technical measures to prevent minors from accessing
unsuitable games or game functions, restrict minors playing time and prevent minors from becoming addicted to online games. Online game operators must require Internet users to go through an identity registration process with valid
identification and online game operators must keep such registration information. In addition, the Rule on Online Games prohibits providers of virtual currency transaction services from offering these services to minors.

On July 1, 2011, GAPP, the Central Civilization Office, Ministry of Education, Ministry of Public Security, MIIT, the Central
Committee of the Communist Youth League, All-China Womens Federation and China National Committee for the Wellbeing of the Youth issued the Notice on the Initiation of the Real-name Verification of the Anti-addiction System for Online Games,
or the Notice on Online Games, effective as of October 1, 2011. According to the Notice on Online Games, the Identity Inquiry Center of the Ministry of Public Security, or the Identity Inquiry Center, is responsible for the verification of
online users identities and all online games companies must cooperate with the Identity Inquiry Center and satisfy all applicable requirements.

Network Information Protection

On December 28, 2012, the Standing
Committee of the National Peoples Congress issued the Decision on Strengthening Network Information Protection.

According to the Decision on Strengthening Network Information Protection, organizations and individuals shall neither steal nor
otherwise unlawfully obtain the personal electronic information of citizens, nor sell or illegally provide others with such electronic information. To collect and use the personal electronic information of citizens during business activities,
network service providers and other enterprises and public institutions shall follow the principles of lawful, righteous and necessary collection and use, specify the purposes, ways and scope of information collection and use, obtain the consent of
the persons whose information is collected, and shall not collect and use such information in violation of laws or regulations, or in breach of mutual agreements.

Network service providers and other enterprises and public institutions shall make public the rules on collecting and using the personal electronic information of citizens. No organization and individual
may send commercial electronic information to the landline number, mobile phone number or personal e-mail address of an electronic information recipient without his/her consent or request, or after he/she has given an explicit refusal.

Punishments against violations of this decision includes giving a warning, imposing fines, confiscating illegal gains, revoking licenses
or cancelling record-filing, shutting down the websites concerned, and prohibiting the persons subject to liability from engaging in network services business. In addition, the violations shall be recorded in the social credit files of the parties
concerned, and be made public. Violations that constitute violations of public security administration shall be given public security administration punishments in accordance with PRC law. Criminal liabilities shall be investigated in accordance
with the law against violations hereof that constitute criminal offenses. Whoever infringes upon the civil rights and interests of others shall bear civil liabilities in accordance with the law.

Dividend Distribution

The principal regulations governing distribution of dividends of wholly foreign-owned enterprises include the Foreign-invested Enterprise Law promulgated by the Standing Committee of the National
Peoples Congress, as amended on October 31, 2000, and the Implementation Rules of the Foreign-invested Enterprise Law issued by the State Council, as amended on April 12, 2001.

Under these laws and regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any,
determined in accordance with PRC accounting standards and regulations. In addition, foreign-invested enterprises in China are required to allocate at least 10% of their respective net profits each year, if any, to fund certain reserve funds unless
these reserves have reached 50% of the registered capital of the enterprises. Foreign-invested enterprises are not allowed to distribute profits until deficits of previous fiscal years have been made up.

Foreign Currency Exchange

The principal regulations governing foreign currency exchange in the PRC are the Foreign Exchange Administration Regulations promulgated by the State Council, as amended on August 5, 2008, or the
Foreign Exchange Regulations. Under the Foreign Exchange Regulations, RMB are freely convertible for current account items, as long as true and lawful transaction basis is provided, but not for capital account items, such as capital transfers,
direct investments, loans, repatriation of investments and investments in securities and derivatives outside of the PRC, unless the prior approval of the State Administration of Foreign Exchange, or SAFE, is obtained and prior registration with SAFE
is made.



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On December 25, 2006, the Peoples Bank of China issued the Administration
Measures on Individual Foreign Exchange Control and SAFE issued its Implementation Rules on January 5, 2007, both of which became effective on February 1, 2007. Under these regulations, all foreign exchange matters involved in employee
stock ownership plans, stock option plans and similar plans participated in by onshore individuals must be transacted upon approval from SAFE or its authorized branch.

On March 28, 2007, SAFE promulgated the Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Option Plan or Stock Option Plan of An Overseas Listed
Company, or Circular 78. Under Circular 78, PRC citizens who participate in stock incentive plans or equity compensation plans of an overseas publicly listed company are required, through a PRC agent or PRC subsidiaries of such overseas
publicly-listed company, to complete certain foreign exchange registration procedures with respect to the plans upon the examination by, and approval of, SAFE.

On August 29, 2008, SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of
Foreign-Invested Enterprises, or SAFE Circular No. 142. Pursuant to SAFE Circular No. 142, RMB-converted capital invested by a foreign-invested enterprise must be used within the enterprises business scope as approved by the
examination and approval authority, and cannot be used to make equity investments in China unless otherwise provided for in the enterprises business scope. Documents certifying the purposes of RMB converted from foreign capital, including a
business contract, must be submitted for such conversion.

In addition, SAFE strengthened its oversight of the flow and use
of RMB-converted capital invested by a foreign-invested enterprise. The use of such RMB capital may not be altered without SAFEs approval, and such RMB capital may not in any case be used to repay an existing RMB loan if the proceeds of such
loan have not been used. Furthermore, on November 19, 2010, SAFE issued the Notice on Strengthening the Administration of Foreign Exchange, or Notice No. 59, which requires the authenticity of settlement of net proceeds from offshore
offerings to be closely examined and the net proceeds to be used in the manner described in the offering documents. Violations of SAFE Circular No. 142 and Notice No. 59 could result in severe monetary or other penalties.

Offshore Financing

On October 21, 2005, SAFE issued Relevant Issues Concerning Foreign Exchange Control on Domestic Residents Corporate Financing and Roundtrip Investment Through Offshore Special Purpose
Vehicles, or Circular 75, which became effective as of November 1, 2005. Circular 75 requires PRC residents to register with the local SAFE branch before establishing or controlling any company outside of China for the purpose of capital
financing with assets or equities of PRC companies, or an offshore special purpose vehicle.

PRC residents that
are shareholders or beneficial owners of offshore special purpose vehicles established before November 1, 2005 were required to register with the local SAFE branch before March 31, 2006. In addition, any PRC resident that is a shareholder
of an offshore special purpose vehicle is required to amend its SAFE registration with respect to that offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment
or creation of any security interest over any assets located in China or other material changes in share capital.

In May
2007, SAFE issued guidance to its local branches with respect to the process for SAFE registration, which standardized more specific and stringent supervision on the registration relating to Circular 75. SAFE issued a series of subsequent rules,
including the Notice on Printing and Distributing the Implementing Rules for the Administration of Foreign Exchange in Fund-Raising and Round-Trip Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or
Circular 19, which became effective on July 1, 2011. Circular 75 and these implementing rules require PRC residents and PRC enterprises to register or file with relevant PRC government authorities their direct or indirect offshore investment
activities, round-trip investments in the PRC conducted through an offshore entity and subsequent changes in their share capital.

We have requested our shareholders and beneficial owners to disclose whether they or their shareholders or beneficial owners fall within the scope of Circular 75 and urge those who are PRC residents to
register with the local SAFE branch as required under Circular 75. As of the date of this annual report, all of our shareholders and beneficial owners who are subject to the SAFE notice have obtained registration in accordance with its requirements.
However, we cannot provide any assurance that all of our shareholders and beneficial owners who are PRC residents will comply with our request to make, obtain or update any applicable registrations or comply with other requirements required by
Circular 75 or other related rules. In case of any non-compliance on any of our PRC resident shareholders or beneficial owners, our PRC subsidiaries and such shareholders and beneficial owners may be subject to fines and other legal sanctions,
including restrictions on our ability to contribute additional capital to our PRC subsidiaries and our PRC subsidiaries ability to distribute dividends to our offshore holding companies, which may adversely affect our business. In July 2014,
Circular 75 was superseded by Notice on Domestic Residents Offshore Financing and Roundtrip Investment Through Special Purpose Vehicles. The impact of this recent regulatory development on our business operations remains unclear.



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On February 15, 2012, SAFE promulgated the Notice on Foreign Exchange Administration
of PRC Residents Participating in Share Incentive Plans of Offshore Listed Companies, or SAFE Circular No. 7, to replace the previous Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership
Plan or Stock Option Plan of Offshore Listed Companies. SAFE Circular No. 7 regulates foreign exchange matters associated with employee stock option incentives or similar incentives permitted under applicable laws and regulations granted to PRC
residents by companies whose shares are listed on offshore stock exchanges. Pursuant to SAFE Circular No. 7, all PRC residents participating in share incentive plans of offshore listed companies shall, through their employers, jointly retain
qualified PRC agents to register with local SAFE branches. PRC residents include PRC nationals or foreign citizens having been consecutively residing in PRC for not less than one year, acting as directors, supervisors, senior management personnel or
other employees of PRC entities affiliated with such offshore listed company. A qualified PRC agent may be a PRC entity involved in the share incentive plan or a PRC institution eligible for asset trusteeship, which is lawfully selected to handle
various foreign exchange matters related to share incentive plans and applies annually for a quota for conversion and/or payment of foreign currencies in connection with the domestic individuals exercise of their employee stock options. The
foreign exchange proceeds received by PRC residents from sale of shares under share incentive plans granted by offshore listed companies must be remitted to bank accounts in China opened by their employers or PRC agents.

Furthermore, a Notice Concerning Individual Income Tax on Earnings from Employee Stock Options, jointly issued by the Ministry of
Finance and SAT, provides that domestic companies that implement employee share option programs must file the employee share option plans and other relevant documents with local tax authorities having jurisdiction over the companies before
implementing such plans, and must file share option exercise notices and other relevant documents with local tax authorities before exercise by their employees of any share options, and clarify whether the shares issuable under the employee share
options referenced in the notices are shares of publicly-listed companies.

We have registered with the local SAFE bureau on
behalf of our employees who have been granted shares or share options under our share/option incentive plan and follow other procedures set forth in SAFE Circular No. 7 and other applicable regulations and we have filed the employee share
option plans and other relevant documents with local tax authorities with competent jurisdiction.

Overseas Listing

On August 8, 2006, six PRC regulatory agencies, namely the Ministry of Commerce, SAT, the State Administration for Industry and
Commerce, the CSRC and SAFE, jointly adopted the M&A Rule, which became effective on September 8, 2006. The M&A Rule, as amended by the Ministry of Commerce on June 22, 2009, requires offshore special purpose vehicles that are
controlled by PRC companies or residents and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing
their securities on an overseas stock exchange.

On September 21, 2006, the CSRC published a notice on its website
specifying the documents and materials that special purpose vehicles are required to submit when seeking CSRC approval for their listings outside of China. The interpretation and application of the M&A Rule remain unclear, and our initial public
offering might have required approval from the CSRC. If it did, it is uncertain how long it will take us to obtain the approval. If CSRC approval was required for our initial public offering, our failure to obtain or delay in obtaining the CSRC
approval would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other
forms of sanctions that may materially adversely affect our business, results of operations and financial condition.

Our PRC
counsel, Han Kun Law Offices, has advised us that, based on their understanding of current PRC laws, regulations and rules and the procedures announced on September 21, 2006, because (i) we established our PRC subsidiaries by means of
direct investment other than by merger or acquisition of the equity or assets of PRC domestic companies, and (ii) there is no provision in the M&A Rule that classifies our contractual arrangements with Hangzhou Sky and Mijia as the
acquisition of Hangzhou Sky and Mijia, we were not required to apply to the CSRC for the approval of the listing and trading of our ADSs on NASDAQ. However, following the State Councils decision to establish the security review system for
mergers and acquisitions of domestic enterprises by foreign investors on February 3, 2011, the Ministry of Commerce promulgated the Regulations on Implementing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by
Foreign Investors on August 25, 2011, or the Security Review System Regulations, which specifically prohibits foreign investors from using contractual control to circumvent the aforesaid security review.



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Although at present the Security Review System Regulations cannot be regarded as a valid
basis for the interpretation of the M&A Rule, substantial uncertainties exist regarding how to interpret and implement the M&A Rule and the opinions of our PRC counsel summarized above are subject to any new laws, rules and regulations or
detailed implementations and interpretations in any form relating to the M&A Rule. We cannot assure you that the relevant PRC government agencies, including the CSRC, would reach the same conclusion as our PRC counsel.



|B. | Organizational Structure
|-- | ------------------------

The following diagram illustrates our shareholding and corporate structure and the place of incorporation of each of our significant
subsidiaries and SPEs as of the date of this annual report. For a listing of all of our significant subsidiaries and SPEs as of the date of this annual report, see Exhibit 8.1 filed herewith.



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LOGO



|(1) | Sky Technologies International Ltd is 60% owned by Sky Network International Ltd and 40% owned by minority investors.
|--- | ---------------------------------------------------------------------------------------------------------------------

|(2) | Mijia is one of our SPEs in China and is currently 46.4% owned by Mr. Michael Tao Song, 23.2% owned by Mr. Li Ou, our former chief technology officer, 9.28%
owned by Mr. Yan Tang, a former officer of our Company and the remaining 21.12% owned by seven of our employees.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Hangzhou Sky is one of our SPEs in China and is currently 80% owned by Mijia and 20% owned by Ms. Qinyi Zhu, wife of Mr. Michael Tao Song.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



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|(4) | Including the following 12 SPEs: Feineng, which is currently 60% owned by Mr. Michael Tao Song, our founder, chairman and chief executive officer, and 40% owned by
Mr. Li Ou; Fanyi, which is currently 75% owned by Mr. Michael Tao Song and 25% owned by Mr. Tao Yang, an employee of an affiliate of the Sequoia Funds; Miyi, which is currently 60% owned by Mr. Michael Tao Song and 40% owned by
Mr. Yan Tang; Najia, which is currently 60% owned by Mr. Li Ou and 40% owned by Mr. Yan Tang; Tianchu, which is currently 60% owned by Mr. Michael Tao Song and 40% owned by Mr. Li Ou; Zunqi, which is currently 100% owned by
Ms. Zi Jin, an employee of the Company; Geyuan, which is currently 100% owned by Mr. Zhen Wang, an employee of the Company; Kaimi, which is currently 100% owned by Mr. Zhe Wang, an employee of the Company; Dangyi, which is currently
100% owned by Mr. Guoping Ou, an employee of the Company; Mugu, which is currently 100% owned by Mr. Wenjie Wu, an employee of the Company; Feidong, which is currently 100% owned by Mr. Wanyan Shao, an employee of the Company; and
Weipin, which is currently 100% owned by Mr. Bo Ning, an employee of the Company.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Sky Investment is one of our SPEs in China and is currently 100% owned by Mr. Michael Tao Song. Sky Investment is currently in the process of deregistration.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Hangzhou Mopin Technologies Co., Ltd. is one of our PRC subsidiaries and is currently 79.88% owned by us and 20.12% owned by Mr. Zhiguo Zhou, an employee of the
Company.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have entered into contractual arrangements with each of our SPEs and their respective shareholders
through which we exercise effective control over the operations of these entities and receive the economic benefits of the shareholders equity interests in these entities. As a result of these contractual arrangements, under IFRS, we are
considered to have control over each of our SPEs, and thus consolidate their results in our consolidated financial statements. See Item 3. Key Information  D. Risk Factors  Risks Related to Doing Business in China  If the PRC
government determines that the contractual arrangements that establish the structure for operating our business do not comply with applicable PRC laws and regulations, we could be subject to severe penalties.

Unless terminated at Dianneng or Tiandians sole discretion, each agreement with the SPEs has a term of ten years or 20 years and
is renewable at Dianneng or Tiandians sole discretion.

Contractual Arrangements with the SPEs and their Shareholders

Our relationships with our SPEs and their shareholders are governed by a series of contractual arrangements. Under PRC law, each of our
SPEs, Dianneng and Tiandian is an independent legal person and none of them is exposed to liabilities incurred by the other parties. Other than pursuant to the contractual arrangements among our SPEs and their respective shareholders and Dianneng
and Tiandian, our SPEs are not required to transfer any funds generated from their operations to Dianneng or Tiandian.

Exclusive Business Cooperation or Service Agreements. Our SPEs have entered into the following service agreements with
Dianneng or Tiandian: a technical support service agreement, a strategy consulting service agreement and an intellectual property license agreement, under which our SPEs engage Dianneng or Tiandian as their exclusive provider of technical support
and strategy consulting services and Dianneng or Tiandian agrees to grant to our SPEs a non-exclusive and non-transferable license to use certain intellectual property owned by it. Our SPEs pay Dianneng or Tiandian service fees and royalties as
determined by Dianneng or Tiandian based on the services provided and the actual use of the intellectual property, respectively. Dianneng and Tiandian own any intellectual property created or obtained by SPEs under the strategy consulting service
agreement.

Equity Pledge Agreements. Our SPEs and their respective shareholders have entered into equity
pledge agreements with Dianneng and Tiandian, under which the shareholders of our SPEs pledged all of their equity interests in the SPEs to Dianneng or Tiandian as collateral for all of payments from the SPEs due to Dianneng or Tiandian under the
above service agreements. If any event of default as defined under these agreements occurs, Dianneng or Tiandian, as pledgee, will be entitled to dispose of the pledged equity interests in certain ways, including by negotiating with such
shareholders for the transfer of the pledged equity interests.

Purchase Option Agreements. Our SPEs and their
shareholders have entered into a purchase option agreements with Dianneng and Tiandian, under which the shareholders of the SPEs irrevocably granted to Dianneng or Tiandian or their designee an exclusive option to purchase equity interests in the
SPEs or all or a part of the assets owned by the SPEs at a purchase price equal to their respective initial contributions to the registered capital of the SPEs.

Dianneng and Tiandian may exercise such options at any time. In addition, the SPEs and their shareholders agree that without Dianneng or Tiandians consent, the SPEs will not sell, transfer, mortgage
or otherwise dispose of any of its assets, business or beneficial interests, engage in any transactions that could substantially affect its assets, liabilities, operations, equity interests or other legal rights, or declare any dividend, unless all
the equity interests in or assets of the SPEs have been transferred to Dianneng or Tiandian pursuant to the option under this agreement.



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Powers of Attorney. The shareholders of the SPEs have executed a power of
attorney to irrevocably grant to Dianneng or Tiandian or their designees the power of attorney to exercise all of their rights as shareholders of the SPEs, including the right to appoint and elect board members and senior management members and
other voting rights.



|C. | Property, Plant and Equipment
|-- | -----------------------------

Our principal executive offices are located at 10/F, Building B, United Mansion, No. 2, Zijinghua Road, Hangzhou, Zhejiang 310013, Peoples Republic of China. We also maintain offices
in Beijing, Shanghai, and Shenzhen under leases with terms ranging from one to three years. In aggregate, we maintained a total of approximately 7,000 square meters of office space as of March 31, 2014. We lease all of our facilities from
independent third parties and do not own any real property.

The following table sets forth a summary of our material leases
as of the date of this annual report:



|         |  |                          |       |  |                   |              |            |             
|-------- |  | ------------------------ | ----- |  | ----------------- | ------------ | ---------- | ------------
|Location |  | Space (in square meters) |       |  | Usage of Property |              | Expiration
|Hangzhou |  |                          | 3,112 |  |                   | Headquarters |            | May 2015    
|         |  |                          | 2,800 |  |                   | Office       |            | May 2015    
|Beijing  |  |                          | 176   |  |                   | Office       |            | May 2014    
|         |  |                          | 133   |  |                   | Office       |            | March 2014  
|Shanghai |  |                          | 347   |  |                   | Office       |            | August 2014 
|         |  |                          | 120   |  |                   | Office       |            | January 2015
|Shenzhen |  |                          | 120   |  |                   | Office       |            | January 2015



We believe that our leased facilities are adequate to meet our needs for the foreseeable future, and that we will be able to obtain adequate facilities, principally through leasing of additional
properties, to accommodate our future expansion.



|ITEM 4A. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|------- | --------------------------------------------

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in
this annual report. This annual report contains forward-looking statements. See   H. Safe Harbor. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking
statements, which involve risks and uncertainties. In evaluating our business, you should also carefully consider the information provided under the caption Item 3. Key InformationD. Risk Factors in this annual report.



|A. | Operating Results
|-- | -----------------

Overview

We are a leading mobile application platform in China in terms of user visits. Since inception, we have focused on
building a large and engaged user base. Our core product, Maopao App Store, allows users to browse and download a wide range of entertainment-oriented mobile applications and content, including games, music and books. Throughout the years, we have
developed a portfolio of Maopao platform products that provide rich functionality and engaging user experience to Android smartphone and feature phone users, including Maopao Game Center, Maopao Community and Maopao Browser. We collaborate with over
250 smartphone and 800 feature phone handset companies to pre-install Maopao platform products on their handsets before shipment. In addition, we partner with mobile network operators to provide customized software services at their physical stores,
including the pre-installation of a wide range of applications that appeal to their customers. As of March 31, 2014, our Maopao platform products in aggregate had attracted approximately 147.3 million smartphone users and approximately 1.3
billion feature phone users.

We have experienced substantial growth since we launched Maopao platform in 2006. In response
to the rise of smartphones and increasing demand for applications and mobile content designed to run on smartphones, we have shifted our strategic focus to the smartphone market in 2012, launching a series of Maopao platform products for
smartphones. For the fiscal year ended March 31, 2014, approximately 43.3% and 56.7% of our revenues were derived from our smartphone and feature phone business, respectively. As the growth of Chinas smartphone market is increasingly
driven by economic smartphones, we are focused on the monetization opportunities in this segment. As we transition from the feature phone business to the smartphone business, we do not expect the transition to require significant additional
resources in terms of personnel, server capacity and customer support other than promotional expenses.



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We generate revenues primarily through our users in-app purchase of virtual-items and
premium features. We source the majority of these applications and content from third-party content providers and develop the remainder of the applications and content in-house. We collect payments primarily through mobile service providers, who
utilize mobile network operators billing channels to collect payment for user purchases of Maopao platform products. We have established and are deepening our partnership with mobile network operators to collect payments directly. In addition,
we work with independent payment processing agents to collect payments through a variety of third-party payment channels, including prepaid cards, bank remittance and online payments. From January 1, 2007 through March 31, 2014, we offered
over 402,097 applications and over 217,681 content titles on Maopao platform and experienced 12.5 billion cumulative downloads.

We share revenue from Maopao platform with handset companies, content providers, mobile service providers and mobile network operators. Costs associated with payments under proceeds sharing arrangements
with these industry participants account for most of our cost of revenues.

Factors Affecting Our Results of Operations

We have benefited from general conditions affecting the mobile applications industry in China, including overall economic growth, which
has resulted in increases in disposable income and discretionary consumer spending; government and industry initiatives accelerating the technological advancement and growth of the mobile handset and mobile applications industry; the growing
popularity of and increasing reliance on mobile handsets for communication needs, sourcing of information and entertainment; and favorable demographic trends, particularly increasing urbanization of young people, who are more inclined to use mobile
applications and content. Our results of operations will continue to be affected by such general conditions.

Our results of
operations are also directly affected by the following specific factors:

The continued growth of Chinas mobile handset industry

We generate revenues from both our smartphone and feature phone businesses. A primary factor impacting our revenues
is the sales volume of mobile handsets in China. While smartphones are gaining popularity in China as they become increasingly affordable, feature phones maintain their appeal in the economic handset market, and represent a significant portion of
the Chinese handset market.

Another factor that may drive the growth of our business is the growth of the domestic mobile
handset industry in China. The rapid growth of the domestic mobile handset market in recent years makes mobile handsets more affordable to a wider variety of people and enables users of economic mobile handsets to upgrade their mobile phones at
relatively low cost. These mobile users typically pay greater attention to mobile handsets performance-to-price ratio and tends to be more attracted to mobile phones entertainment functionality. We believe that the mobile entertainment
industry will benefit from the proliferation of economic domestic mobile handsets in China.

Our ability to increase the installed base
of our products

Our results of operations significantly depend on the overall size of our user base, which in turn
largely depends on the size of the installed base of our Maopao platform products and demand for handsets pre-installing Maopao platform products. To build and broaden our user base, we have primarily relied on pre-installing our Maopao platform
products onto smartphones and feature phones. We believe our success substantially depends on our ability to maintain and enhance our relationships with handset companies and establish cooperation with additional handset companies, particularly
those with substantial market share or high growth potential.

As of March 31, 2014, we had pre-installation
arrangements with over 250 smartphone and 800 feature phone handset companies. As of March 31, 2014, our Maopao platform products had approximately 147.3 million cumulative smartphone users and 1.3 billion cumulative feature phone users.
Our large user base has contributed to our growth and our central position in the mobile application sector.



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Our ability to continue to source and offer popular applications and content and monetize our large
user base

We generate revenues primarily through users in-app purchase of virtual-items and premium features.
This substantially depends on our ability to source applications and content that cater to rapidly changing user preferences, mobilize our user base into a community of active paying members and appropriately price our content offerings. Our ability
to identify and offer applications and other content appealing to our target users in China, such as popular local card games, mobile social games, mobile books, dating-related applications and other social network functions, has significantly
contributed to our growth.

We believe the popularity of our applications and content on Maopao platform affects the loyalty
and spending of our users. Our results of operations significantly depend on our ability to source, aggregate and update applications and content on Maopao platform to cater to users changing interests, needs and preferences and attract users
to download and pay for such applications and content.

Revenues from multi-player games have grown rapidly since February
2010 when we launched Fantasy of the Three Kingdoms, our first major top-selling multi-player game, and we continue to increase our offerings of multi-player games to capture user interest. During the fiscal year ended March 31, 2014, we
offered over 1,000 of multi-player games on our Maopao platform, among which Fantasy of the Three Kingdoms, Armed Heroes Online and Xian Jian Wen Qing ranked in the top of our best-selling games. We expect to introduce new multi-player games over
the next year by collaborating with third-party game developers.

We typically determine the prices of applications and
content we offer. Most of our applications are free to download, and we generate our revenues from sales of in-app virtual items and premium features. In addition, we offer certain applications and content free of charge to complement our product
offerings and stimulate user interest. We believe our results of operations significantly depend on our ability to balance free offerings with paid offerings and price our product offerings competitively to optimize user monetization.

From an industry perspective, we believe that the mobile games sector is the most popular mobile applications and one of the fastest
growing mobile application sectors in China. In order to enhance our monetization opportunities, we have been since 2012 promoting, primarily through our Maopao Game Center, an increasing number of light games, which are easy-to-play
micropayment mobile games that do not require significant data usage or constant mobile network connection. Our light games target students and working class frequent gamers with lower-end handsets and smaller data plans. Our Maopao Game
Center provides distribution, billing and data analysis capabilities for small and mid-sized game developers and easy downloads of mobile games for economic mobile handset users. We believe that Maopao Game Center enhances our collaboration with
game developers, especially small and mid-sized game developers, and further expands our user base.

Our ability to more efficiently
collect sales proceeds

We collect a large portion of our sales proceeds through mobile service providers who utilize
mobile network operators billing channels to collect sales proceeds from user purchases on Maopao platform. Billing and transmission failures, such as failures to transmit MR data due to technical problems with the network or mobile
service providers failure to collect all or part of sales proceeds, adversely affect collection efficiency. Mobile service providers ability to avoid and address such failures varies. When users make a purchase, we direct the purchase to
the mobile service provider of our choice.

We aim to maximize collection of sales proceeds by collaborating with mobile
service providers with better collection performance, shorter payment periods and lower transmission error rates, and closely monitoring them to lower collection related risks. We share a percentage of sales proceeds with mobile service
providers. We have established and are deepening our partnership with mobile network operators directly without using mobile service providers as intermediaries to collect payment. In addition, users can make purchases in our Maopao Community
through various third-party payment channels. Payment channel cost represented the largest component of our cost of revenues in each of the three fiscal years ended March 31, 2012, 2013 and 2014.

We intend to increasingly collect payments directly through mobile network operators or through independent payment processing agents to
reduce payment channel cost as a percentage of our cost of revenues.

Our ability to control costs related to handset companies and
content providers

We share revenue with handset companies that pre-install Maopao platform products as well as
content providers from whom we license applications and content. Payments to handset companies and content providers constituted a significant portion of our cost of revenues in each of the fiscal years ended March 31, 2012, 2013 and 2014.
Therefore, any change in our revenue sharing arrangements with handset companies and content providers could significantly affect our results of operations. In addition, we selectively purchase third-party applications and mobile content from
content providers, and have developed certain applications and mobile content in-house. As the applications or mobile content purchased or developed in-house do not involve revenue sharing with content providers, we may achieve higher profit margins
if these applications and mobile content gain increasing popularity among our users.



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In line with industry practice in China, we share revenue with content providers and
handset companies based on user transaction data recorded by mobile service providers. To identify a particular handset company and applications and content users purchase from its handsets, a designated authorization code is built in to its handset
when pre-installing Maopao platform products. There has been instances where handset companies, when introducing a new handset model in tight time frame, pre-installed our Maopao platform products to enhance handset features without obtaining
authorization codes from us. In such circumstances, we were not able to recognize the handset models purchasing from Maopao platform and as a result was not able to share revenue with these handset companies.

Our track record of revenue sharing with handset companies has promoted our brand and our capability to generate additional revenue
streams for handset companies. As such, an increasing number of handset companies have partnered with us to pre-install our authorized codes in each of the three fiscal years ended March 31, 2012, 2013 and 2014. As a result, the percentage of
transactions effected through Maopao platform attributable to pre-installations had increased during the same period, causing our revenue sharing with handset companies to increase accordingly.

Our ability to address challenges associated with policy changes and mobile network operators business practices

PRC government authorities and mobile network operators may issue or revise rules, policies or guidelines that affect our results of
operations. For example, in January 2010, China Mobile, the largest mobile network operator in China, implemented a series of measures to improve the user experience for mobile handset embedded services. Under these measures, mobile applications and
other content embedded in handsets are required to contain additional notices and confirmations to users during purchases. In addition, services based on SMS short codes are required to be more tailored to the specific mobile applications and
content offerings or service providers. These measures made it more burdensome for our users to make purchases, causing certain users to decrease or cease purchasing from us entirely. Furthermore, since September 2010, China Mobile has applied a set
of measures that require users to send triple confirmation SMSs before a transaction can be effected. The additional SMS confirmations required by China Mobile has led to a higher percentage of failed payments.

The foregoing developments have adversely affected our revenues. If similar or more stringent measures are imposed by the government or
mobile network operators, our results of operations may be materially adversely affected.

Revenues

Our revenues amounted to RMB685.6 million, RMB601.1 million and RMB485.6 million (US$78.1 million) in the fiscal years ended
March 31, 2012, 2013 and 2014, respectively. We began generating revenues from our smartphone business in the fiscal year ended March 31, 2014, which constituted approximately 43.3% of our revenues during the same period.

In the three fiscal years ended March 31, 2014, we derived a majority of our revenues from sales of mobile applications and other
content through our mobile application stores, Maopao App Store and Maopao Game Center, which we refer to as application store revenues. We collect a large portion of our sales proceeds through mobile service providers, who utilize mobile network
operators billing channels pursuant to their agreements with network operators. In addition, we have been contracting directly with mobile network operators to collect sales proceeds since 2012. Our users can make in-app purchases from a wide
variety of mobile games, applications and content offered in Maopao App Store and Maopao Game Center through our mobile service providers and mobile network operators.

We also offer community-based applications, including mobile social games and social network application in our Maopao Community. Users can top up their accounts using a number of payment options,
including pre-paid phone cards and game cards, bank debit cards and online payment solutions, to purchase virtual items and premium features in Maopao Community. We refer to such revenues as Maopao Community revenues. We collect Maopao community
revenue through payment processing agents and mobile service providers.

We allow content providers, mobile service providers
and mobile network operators to distribute their mobile applications and other contents to mobile users through our Maopao platform, and in return receive a commission based on a percentage of the revenue generated from these applications or number
of activations. We refer to such revenue as other revenues. Other revenues also include application store revenues from overseas through local mobile service providers.



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The following table sets forth application store revenues, Maopao Community revenues and
other revenues, both in absolute amount and as a percentage of total revenues, for the periods indicated:



|                           |  |                                   |         |  |      |  |       |      |  |  |         |  |  |     |       |  |   |  |         |  |  |  |       | 
|-------------------------- |  | --------------------------------- | ------- |  | ---- |  | ----- | ---- |  |  | ------- |  |  | --- | ----- |  | - |  | ------- |  |  |  | ----- | 
|                           |  | For the Year Ended March 31,      |        
|                           |  | 2012                              |         |  | 2013 |  |       | 2014 | 
|                           |  | RMB                               |         |  | %    |  |       | RMB  |  |  | %       |  |  | RMB |       |  | % | 
|                           |  | (in thousands, except percentage) |        
|                           |  |                                   |         |  |      | 
|Revenues                   |  |                                   |         |  |      |  |       |      |  |  |         |  |  |     |       |  |   |  |         |  |  |  |       | 
|Application store revenues |  |                                   | 546,117 |  |      |  | 70.7  |      |  |  | 381,573 |  |  |     | 63.5  |  |   |  | 272,300 |  |  |  | 56.1  | 
|Maopao Community revenues  |  |                                   | 110,536 |  |      |  | 16.1  |      |  |  | 177,658 |  |  |     | 29.6  |  |   |  | 144,015 |  |  |  | 29.7  | 
|Other revenues             |  |                                   | 28,910  |  |      |  | 4.2   |      |  |  | 41,876  |  |  |     | 6.9   |  |   |  | 69,236  |  |  |  | 14.2  | 
|                           |  |                                   |         |  |      |  |       |      |  |  |         |  |  |     |       |  |   |  |         |  |  |  |       | 
|                           |  |                                   |         |  |      | 
|Total Revenue              |  |                                   | 685,563 |  |      |  | 100.0 |      |  |  | 601,107 |  |  |     | 100.0 |  |   |  | 485,551 |  |  |  | 100.0 | 
|                           |  |                                   |         |  |      |  |       |      |  |  |         |  |  |     |       |  |   |  |         |  |  |  |       | 

In the fiscal year ended March 31, 2014, the number of new users to our Maopao App Store and Maopao
Game Center decreased to approximately 203.5 million from approximately 321.7 million in the fiscal year ended March 31, 2012. The decrease in user visits and downloads were primarily as a result of the declining feature phone market
in China, partially offset by the rapid growth of our smartphone business.

The following table sets forth total user
downloads of our applications and content titles offered in Maopao App Store and Maopao Game Center for the periods indicated:



|                                                  |  |                              |         |  |      |  |         |      |  |  |       | 
|------------------------------------------------- |  | ---------------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ----- | 
|                                                  |  | For the Year Ended March 31, |        
|                                                  |  | 2012                         |         |  | 2013 |  |         | 2014 | 
|                                                  |  | (in millions)                |        
|Single-user application and content downloads     |  |                              |         |  |      |  |         |      |  |  |       | 
|Single-player games                               |  |                              | 1,279.7 |  |      |  | 861.2   |      |  |  | 548.6 | 
|Other single-user applications and content titles |  |                              | 1,943.0 |  |      |  | 1,468.2 |      |  |  | 786.4 | 

We expect Maopao Community revenues to continue to represent a significant component of our revenues in
the foreseeable future due to our efforts to improve average revenue per user on our mobile social games offered in Maopao Community, despite a decrease in the number of active members and log-ins. The following table sets forth our selected
quarterly Maopao Community operating data for the periods indicated:



|                         |  |                                  |       |  |                   |  |       |                  |  |  |               |  |  |  |       | 
|------------------------ |  | -------------------------------- | ----- |  | ----------------- |  | ----- | ---------------- |  |  | ------------- |  |  |  | ----- | 
|                         |  | For the Three Month Period Ended |      
|                         |  | June 30,2013                     |       |  | September 30,2013 |  |       | December 31,2013 |  |  | March 31,2014 | 
|                         |  | (in millions)                    |      
|Number of active members |  |                                  | 7.6   |  |                   |  | 5.1   |                  |  |  | 3.2           |  |  |  | 3.0   | 
|Number of member log-ins |  |                                  | 479.3 |  |                   |  | 414.0 |                  |  |  | 287.5         |  |  |  | 262.9 | 

Cost of Revenues and Gross Margin

Our cost of revenues consists primarily of costs associated with payments to industry participants and direct costs.



|                                                        |  |                                   |         |  |      |  |       |      |  |  |         |  |  |     |       |  |     |  |         |   |  |  |        |  |  |  |       | 
|------------------------------------------------------- |  | --------------------------------- | ------- |  | ---- |  | ----- | ---- |  |  | ------- |  |  | --- | ----- |  | --- |  | ------- | - |  |  | ------ |  |  |  | ----- | 
|                                                        |  | For the Year Ended March 31,      |        
|                                                        |  | 2012                              |         |  | 2013 |  |       | 2014 | 
|                                                        |  | RMB                               |         |  | %    |  |       | RMB  |  |  | %       |  |  | RMB |       |  | US$ |  |         | % | 
|                                                        |  | (in thousands, except percentage) |        
|                                                        |  |                                   |         |  |      |  |      
|Cost of Revenues                                        |  |                                   |         |  |      |  |       |      |  |  |         |  |  |     |       |  |     |  |         |   |  |  |        |  |  |  |       | 
|Costs associated with payments to industry participants |  |                                   | 429,385 |  |      |  | 91.2  |      |  |  | 375,987 |  |  |     | 89.8  |  |     |  | 334,839 |   |  |  | 53,864 |  |  |  | 91.9  | 
|Direct costs                                            |  |                                   | 41,640  |  |      |  | 8.8   |      |  |  | 42,793  |  |  |     | 10.2  |  |     |  | 29,596  |   |  |  | 4,761  |  |  |  | 8.1   | 
|                                                        |  |                                   |         |  |      |  |       |      |  |  |         |  |  |     |       |  |     |  |         |   |  |  |        |  |  |  |       | 
|Total cost of revenues                                  |  |                                   | 471,025 |  |      |  | 100.0 |      |  |  | 418,780 |  |  |     | 100.0 |  |     |  | 364,435 |   |  |  | 58,625 |  |  |  | 100.0 | 
|                                                        |  |                                   |         |  |      |  |       |      |  |  |         |  |  |     |       |  |     |  |         |   |  |  |        |  |  |  |       | 



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Costs associated with payments to industry participants represent consideration paid to
(i) mobile service providers for collecting application store revenues; (ii) handset companies for pre-installing Maopao platform products onto their handsets before shipment; and (iii) content providers for licensing applications and
content that we offer on our Maopao platform.

As consideration for using their payment channels, we generally share with
mobile service providers a percentage of our sales proceeds collected through them. Our cooperation agreements with mobile service providers usually contain provisions relating to proceeds sharing ratios, processing fee ratios and billing rates of
mobile network operators. We usually settle our balances with mobile service providers every month. Revenues generated through our top three mobile service providers, Rock.com, Shenzhen Xunhong and Beijing Zancheng, contributed approximately 6.2%,
3.3% and 3.1%, respectively, of our total revenues for the fiscal year ended March 31, 2014. Our contracts with mobile service providers usually have one or two years terms. We have also established cooperative relationship with all three
dominant mobile network operators in China, who granted us access to their payment channels and enabled us to collect a portion of our proceeds from them without using mobile service providers as intermediaries. We plan to deepen our cooperation
with the mobile network operators to achieve faster payment collection at lower payment channel costs.

We generally pay
handset companies a percentage of the revenue that are generated from their handsets or a fixed fee based on number of activations. To identify a particular handset company and users purchases from its handsets, a designated authorization code is
built in to its handset when pre-installing Maopao platform products.

We typically pay content providers a percentage of the
revenue derived from their applications or mobile content or a fixed fee based on number of activations. To a lesser extent, we selectively purchase applications and mobile contents from content providers, the payment of which is included in our
cost of revenues at the time of the acquisition. We do not capitalize and amortize such payments over the life of the application or mobile content because such applications and mobile content usually have short life cycles and the acquisition cost
for each application or mobile content is relatively low.

Direct costs primarily include fees we pay for outsourcing
design-related work for pre-installing our Maopao platform products on handsets, employee salaries and benefits, utilities, depreciation of equipment and office expenses directly related to the operation of Maopao platform. The decrease in direct
costs was primarily due to decreased headcounts for our feature phone business as we transitioned to the smartphone business.

Approximately RMB27.3 million accrued costs payable for content and handset software design were reversed into cost of revenue upon the
expiration of the statute of limitations in the fiscal year ended March 31, 2012. Such accrued costs originated from the incomplete data provided by mobile network operators prior to March 2010, as a result of which we were unable to identify
the content providers or handset models for the relevant transactions. We did not have such reversals in fiscal years ended March 31, 2013 or 2014.

Our gross margins were 31.3%, 30.3% and 24.9% in the fiscal years ended March 31, 2012, 2013 and 2014, respectively. The decrease in our gross margin from the fiscal year ended March 31, 2012 to
the fiscal year ended March 31, 2013 was mainly due to the reversal of the above mentioned accrued cost in fiscal years ended March 31, 2012. The decrease in our gross margin from the fiscal year ended March 31, 2013 to the fiscal
year ended March 31, 2014 was primarily a result of the higher revenue contribution of our smartphone business. Our smartphone business in general has a lower profit margin compared to our feature phone business as we generally offer more
attractive revenue sharing propositions to smartphone content providers and handset companies, in an effort to facilitate our transition to the smartphone business.



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Operating Expenses

Our operating expenses consist of research and development expenses, sales and marketing expenses, general and administration expenses and other operating income. The following table sets forth a
breakdown of our operating expenses in absolute amount and as a percentage of our total operating expenses for the periods indicated:



|                                    |  |                                   |         |   |      |  |       |      |  |  |         |   |  |     |       |   |     |  |         |   |  |  |        |   |  |  |       |  
|----------------------------------- |  | --------------------------------- | ------- | - | ---- |  | ----- | ---- |  |  | ------- | - |  | --- | ----- | - | --- |  | ------- | - |  |  | ------ | - |  |  | ----- | -
|                                    |  | For the Year Ended March 31,      |        
|                                    |  | 2012                              |         |   | 2013 |  |       | 2014 | 
|                                    |  | RMB                               |         |   | %    |  |       | RMB  |  |  | %       |   |  | RMB |       |   | US$ |  |         | % | 
|                                    |  | (in thousands, except percentage) |        
|                                    |  |                                   |        
|Operating Expenses*                 |  |                                   |         |   |      |  |       |      |  |  |         |  
|Research and development expenses   |  |                                   | 71,088  |   |      |  | 37.7  |      |  |  | 73,027  |   |  |     | 41.6  |   |     |  | 38,644  |   |  |  | 6,216  |   |  |  | 30.3  |  
|Sales and marketing expenses        |  |                                   | 37,361  |   |      |  | 19.8  |      |  |  | 35,369  |   |  |     | 20.1  |   |     |  | 36,351  |   |  |  | 5,848  |   |  |  | 28.5  |  
|General and administration expenses |  |                                   | 83,996  |   |      |  | 44.5  |      |  |  | 69,491  |   |  |     | 39.6  |   |     |  | 58,401  |   |  |  | 9,395  |   |  |  | 45.7  |  
|Other operating income, net         |  |                                   | (3,675  | ) |      |  | (2.0  | )    |  |  | (2,320  | ) |  |     | (1.3  | ) |     |  | (5,772  | ) |  |  | (929   | ) |  |  | (4.5  | )
|                                    |  |                                   |         |   |      |  |       |      |  |  |         |   |  |     |       |   |     |  |         |   |  |  |        |   |  |  |       |  
|Total operating expenses            |  |                                   | 188,770 |   |      |  | 100.0 |      |  |  | 175,567 |   |  |     | 100.0 |   |     |  | 127,624 |   |  |  | 20,530 |   |  |  | 100.0 |  
|                                    |  |                                   |         |   |      |  |       |      |  |  |         |   |  |     |       |   |     |  |         |   |  |  |        |   |  |  |       |  



|* | Includes share-based compensation expenses as follows:
|- | ------------------------------------------------------



|                                        |  |                              |        |  |      |  |        |      |  |  |        |  |  |  |       | 
|--------------------------------------- |  | ---------------------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  |  | ----- | 
|                                        |  | For the Year Ended March 31, |       
|                                        |  | 2012                         |        |  | 2013 |  |        | 2014 | 
|Share-Based Compensation Data           |  | RMB                          |        |  | RMB  |  |        | RMB  |  |  | US$    | 
|                                        |  | (in thousands)               |       
|Research and development expenses       |  |                              | 8,536  |  |      |  | 5,900  |      |  |  | 4,338  |  |  |  | 698   | 
|Sales and marketing expenses            |  |                              | 3,552  |  |      |  | 2,067  |      |  |  | 3,613  |  |  |  | 581   | 
|General and administration expenses     |  |                              | 30,656 |  |      |  | 14,017 |      |  |  | 8,691  |  |  |  | 1,398 | 
|                                        |  |                              |        |  |      |  |        |      |  |  |        |  |  |  |       | 
|Total share-based compensation expenses |  |                              | 42,744 |  |      |  | 21,984 |      |  |  | 16,642 |  |  |  | 2,677 | 
|                                        |  |                              |        |  |      |  |        |      |  |  |        |  |  |  |       | 

Research and development expenses

Our research and development expenses consist primarily of salaries and benefits for personnel engaged in the research and development of
Maopao platform products and communication fees we paid for testing our research and development work. Research and development expenses accounted for 10.4%, 12.1% and 8.0% of our total revenues in the fiscal years ended March 31, 2012, 2013
and 2014, respectively.

Our research and development expenses increased from the fiscal year ended March 31, 2012 to
the fiscal year ended March 31, 2013, primarily due to increased research and development efforts associated with our smartphone business, which was launched in 2012. Our research and development expenses decreased from the fiscal year ended
March 31, 2013 to the fiscal year ended March 31, 2014, primarily because we reduced resources allocated to our feature phone business. We expect our research and development expenses to increase in the future in line with the rapid growth
of our smartphone business.

Sales and marketing expenses

Our sales and marketing expenses primarily consist of salaries and benefits for our sales and marketing staff, training expenses for our
sales team, traveling, entertainment, office expenses and market survey fees related to our sales and marketing activities. Sales and marketing expenses accounted for 5.4%, 5.9% and 7.5% of our total revenues in the fiscal years ended March 31,
2012, 2013 and 2014, respectively.

Our sales and marketing expenses decreased from the fiscal year ended March 31, 2012
to the fiscal year ended March 31, 2013, primarily due to decreased headcount for our sales and marketing personnel in an effort to enhance labor efficiency. Our sales and marketing expenses increased from the fiscal year ended March 31,
2013 to the fiscal year ended March 31, 2014, primarily due to increased sales and marketing efforts, which was in line with the expansion of our smartphone business. We expect that our sales and marketing expenses to continue to increase as we
promote our Maopao brand and expand our smartphone business.

General and administration expenses

Our general and administration expenses primarily consist of salaries and benefits for our general and administration, finance and human
resources personnel, training expenses, depreciation and amortization expenses, office rentals, professional service fees and other expenses incurred for general corporate purposes. General and administration expenses accounted for approximately
12.3%, 11.6% and 12.0% of our total revenues in the fiscal years ended March 31, 2012, 2013 and 2014, respectively.



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Our general and administration expenses have decreased in recent years, primarily due to
decreased headcounts for our general and administrative personnel in an effort to enhance labor efficiency. We expect our general and administration expenses, including expenses related to maintaining effective internal control over financial
reporting and complying with our reporting obligations, to remain relatively stable in the future. We also expect to incur additional general and administrative expenses in line with the expansion of our business.

Other operating income, net

Our other operating income in the fiscal year ended March 31, 2014 was RMB5.8 million (US$0.9 million), which primarily related to local government grants of RMB4.0 million and reimbursement from the
depositary of RMB1.9 million related to the ADS program. Other operating income in the fiscal year ended March 31, 2013 was RMB2.3 million, which primarily related to local government grants of RMB2.9 million for certain research and
development projects. Other operating income in the fiscal year ended March 31, 2012 was RMB3.7 million, which primarily included a RMB2.1 million local government grant and gains on disposal of a subsidiary of RMB1.9 million.

Other Gains and Losses

We had other gains of RMB11.6 million, RMB15.5 million and RMB17.5 million (US$2.8 million) in fiscal 2012, 2013 and 2014, respectively. The other gains in the fiscal year ended March 31, 2014
primarily related to interest income of RMB15.9 million (US$2.6 million), income on short-term investments of RMB2.6 million (US$0.4 million) and change in fair value of investment at FVTPL of RMB1.1 million (US$0.2 million), partially offset by an
exchange loss of RMB2.1 million (US$0.3 million). The other gains in the fiscal year ended March 31, 2013 primarily related to interest income of RMB16.2 million, partially offset by an exchange loss of RMB0.4 million. The other gains in the
fiscal year ended March 31, 2012 primarily related to interest income of RMB12.1 million and a one-off government grant of RMB2.3 million for our initial public offering in December 2010, partially offset by an exchange loss of RMB3.3 million.

Impairment on Investment in Associates

We recognized a RMB0.7 million (US$0.1 million) impairment of our investment in Dream Sky during the fiscal year ended March 31, 2014, and a RMB1.4 million impairment of our investment in DigiMobi
during the fiscal year ended March 31, 2013, due to their continued underperformance and the negative discounted cash flow forecasts. We did not recognize any impairment on investment in associates in the fiscal year ended March 31, 2012.

Impairment on an Available-for-sale Investment

We recognized a RMB0.8 million (US$0.1 million) impairment of our investment in Mokee during the fiscal year ended March 31, 2014 due to its continued underperformance and the negative discounted
cash flow forecast. We did not recognize any impairment on an available-for-sale investment in the fiscal years ended March 31, 2012 or 2013.

Share of Results of Associates

We had 21 associates as of
March 31, 2014, all of which are private companies primarily engaged in wireless technology development and related applications in the PRC. The results, assets and liabilities of these associates are incorporated in our consolidated financial
statements using the equity method of accounting.

Share-based Compensation

In March 2010, we adopted our 2010 Share Incentive Plan, or the 2010 Plan. The maximum number of shares that may be issued under the
2010 Plan initially was 15,000,000 shares. As of March 31, 2014, an aggregate of 3,520,232 restricted shares and options to purchase 2,040,778 common shares were outstanding under the 2010 Plan. See  Item 6. Directors, Senior
Management and Employees  B. Compensation of Directors and Senior Executive Officers  Share Incentive Plan.

On April 1, 2010, we granted 1,443,600 share options to our employees. On September 15, 2010, we granted an aggregate of
3,320,400 share options with exercise prices of US$0.26 per share to executive officers and other employees. On January 6, 2011, we granted an aggregate of 100,000 share options with exercise prices of US$1.00 per share to executive
officers and other employees. On January 9, 2011, we granted an aggregate of 100,000 share options with exercise prices of US$1.00 per share to executive officers and other employees.



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On April 1, 2010, Xplane Ltd. issued 493,400 of its restricted shares to its
shareholders who are also our employees. Of these 493,400 shares, 40% vest on the second anniversary of the grant date and 20% vest on the third, fourth, and fifth anniversaries of the grant date. We measured the fair value of these restricted
shares based on the fair value of our shares, as Xplane Ltd. has no other assets except for its investment in us. The fair value of such restricted shares as of April 1, 2010 was RMB126 (US$19) per share. We recognize the total amount of
approximately RMB62.4 million as compensation expense over the five-year deemed service, or vesting, period with a corresponding increase in reserve in the statement of changes in equity.

On March 7, 2012, we issued 4,038,176 of our restricted shares to our employees. At the same time, Xplane Ltd. granted 3,340,400 of
our restricted shares to employees of our company. The holders of these shares retain the voting and dividends rights of, but are restricted from selling, such non-vested restricted shares. The 7,378,576 shares vest 25% on each anniversary of the
grant date. We measured the fair value of the restricted shares based on the open market quote of our shares, which was RMB2.88 (US$0.46). We recognize the total amount of approximately RMB21.3 million as compensation expense over the four-year
deemed service, or vesting period with a corresponding increase in reserve in the statement of changes in equity.

On
April 15, October 30 and November 18, 2013, we issued 100,000, 1,600,000 and 40,000 restricted shares to certain of our directors and senior management. The holders of these restricted shares retain the voting and dividend rights
of, but is restricted from selling, such non-vested restricted shares. These restricted shares vest one-fourth or one-third on each anniversary of the respective grant dates. We measured the fair value of the restricted shares based on the open
market quote of our shares, which was RMB1.24 (US$0.20), RMB2.99 (US$0.49) and RMB2.61 (US$0.43) per share, respectively. We will recognize the total amount of RMB5,008,000 as compensation expense over the deemed service years, or vesting period
with a corresponding increase in reserve in the consolidated statement of changes in equity.

Taxation

Cayman Islands

We are incorporated in the Cayman Islands. Under Cayman Islands law, we are not subject to income or capital gains tax. In addition,
payment of dividends by us to our shareholders is not subject to withholding tax in the Cayman Islands.

China

PRC Enterprise Income Tax, or EIT

Prior to January 1, 2008, companies established in China were generally subject to a state tax and local EIT at statutory rates of 30% and 3%, respectively. Our SPE, Hangzhou Sky, was established in
2005 and qualified as a software enterprise in 2007. Under PRC tax laws and regulations, an enterprise qualified as a software enterprise was entitled to an exemption from EIT for its first two profitable years and a 50%
reduction of its applicable EIT rate for the subsequent three years. Hangzhou Sky was thus entitled to a full exemption from the EIT in 2008 and 2009 and a 50% reduced EIT rate from 2010 to 2012.

On March 16, 2007, the National Peoples Congress of China enacted a new enterprise income tax law, or the PRC Enterprise
Income Tax Law, which took effect beginning January 1, 2008. On December 6, 2007, the State Council also adopted the Implementing Rules for the Enterprise Income Tax Law, or the Implementing Rules, which also took effect beginning
January 1, 2008. Under the PRC Enterprise Income Tax Law, foreign invested enterprises, or FIEs, and Chinese domestic companies are subject to EIT at a uniform rate of 25%. Our PRC subsidiaries and SPEs other than Hangzhou Sky and Mijia are
currently subject to the EIT rate of 25%.

Preferential tax treatments will continue to be granted to entities that are
classified as high and new technology enterprises strongly supported by the State or that conduct business in encouraged sectors, whether FIEs or domestic companies. On February 22, 2008, the Ministry of Finance and SAT promulgated
the Notice on Several Preferential Policies in Respect of Enterprise Income Tax, or Notice No. 1, reiterating the policy that a software enterprise newly established within China may, upon determination, be exempted from income taxes for its
first two profit-making years and shall be subject to the income tax at half the standard rate for the next three years.

On
April 24, 2009, the Ministry of Finance and SAT promulgated the Notice on Several Issues Relevant to the Implementation of the Preferential Policies on Enterprise Income Tax, which states that software enterprises and integrated circuit
production enterprises established prior to the end of 2007 may, upon certification, enjoy the preferential policies on the EIT reductions and exemptions within specified periods as provided in Notice No. 1. Therefore, as a software
enterprise, Hangzhou Sky was entitled to an exemption from the EIT in 2008 and 2009 and a 50% reduced EIT rate from 2010 to 2012. The reduced applicable EIT rate for Hangzhou Sky from 2010 to 2012 was 12.5%. In addition, Hangzhou Sky qualified
as a high and new technology enterprise in 2008 and its qualification was reviewed and approved in 2011, which entitles it to a 15% preferential EIT rate from 2012 to 2014.



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After Hangzhou Skys qualification as a software enterprise expired at the
end of 2012, it became entitled to the 15% preferential tax treatment as long as it continues to qualify as a high and new technology enterprise. In addition, Mijia, as a software enterprise, was entitled to a full exemption
from EIT in 2010 and 2011 and is entitled to a 50% reduced EIT rate from 2012 to 2014. The reduced applicable EIT rate for Mijia from 2012 to 2014 is 12.5%.

However, continued qualification as a high and new technology enterprise is subject to a review every three years by the relevant government authorities in China, and continued qualification
as a software enterprise is subject to an annual assessment by the relevant government authorities in China. Consequently, Hangzhou Sky or Mijia may not meet the qualifications and the relevant government authorities may revoke Hangzhou
Skys high and new technology enterprise or Mijias software enterprise status in the future. Any increase in Hangzhou Sky or Mijias EIT rate may materially adversely affect our results of operations.

In addition, under the PRC Enterprise Income Tax Law and the Implementing Rules, dividends generated from the business of
our PRC subsidiaries after January 1, 2008 and payable to us may be subject to a withholding tax of 10% as we are a non-resident enterprise incorporated outside of the PRC and the Cayman Islands does not have a tax treaty with China that
provides for a different withholding arrangement. Distributions of earnings generated before January 1, 2008 are exempt from PRC withholding tax.

The PRC Enterprise Income Tax Law provides that enterprises established outside China whose effective management is located in China are considered resident enterprises and will
generally be subject to the uniform 25% EIT rate on their global income. Under the Implementing Rules, effective management is defined as substantial and overall management and control over such aspects as the production and business,
personnel, accounts and properties of an enterprise. We may be deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law and we may be subject to PRC EIT at the rate of 25% on our worldwide income. See Item 3. Key
Information  D. Risk Factors  Risks Related to Doing Business in China  We may be classified as a resident enterprise for PRC EIT purposes, which could result in our global income becoming subject to the 25%
PRC EIT rate.

PRC Business Tax and Value Added Tax

Prior to January 1, 2012, pursuant to Provisional Regulation of China on Business Tax and its implementing rules, any entity or
individual rendering services in the territory of PRC was generally subject to a business tax at the rate of 5% on the revenues generated from provision of such services. In November 2011, the PRC Ministry of Finance and the State Administration of
Taxation jointly issued two circulars setting out the details of the VAT Pilot Program, which changes business tax to value-added tax for certain industries, including, among others, transportation services, research and development and technical
services, information technology services, and cultural and creative services. The VAT Pilot Program initially applied only to these industries in Shanghai, and has been expanded to eight additional provinces, including Beijing, Tianjin, Zhejiang
Province (including Ningbo), Anhui Province, Guangdong Province (including Shenzhen), Fujian Province (including Xiamen), Hubei Province and Jiangsu Province in 2012. On May 24, 2013, the Ministry of Finance and the SAT jointly issued the
Circular on Tax Policies on the Nationwide Expansion of the Pilot Program for the Collection of Value Added Tax in Lieu of Business Tax in the Transportation Industry and Certain Modern Services Industries, or Circular 37, which expanded the VAT
Pilot Program nationwide as of August 1, 2013. Pursuant to the Circular on the Inclusion of Telecommunications Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax promulgated by Ministry of Finance and the SAT on
April 29, 2014, or Circular 43, Circular 37 has been replaced by Circular 43 and the VAT Pilot Program has been expanded to cover telecommunication service, as currently conducted by us, as of June 1, 2014.

Critical Accounting Policies and Estimates

We prepare our financial statements in conformity with IFRS, which requires us to make judgments, estimates and assumptions. We regularly evaluate these estimates and assumptions based on the most
recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual
results could differ from our expectations as a result of changes in our estimates.



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An accounting policy is considered critical if it requires an accounting estimate to be
made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to
occur periodically, could materially impact the consolidated financial statements.

We believe that the following accounting
policies involve a higher degree of judgment and complexity in their applications and require us to make significant accounting estimates. The following descriptions of critical accounting policies, judgments and estimates should be read in
conjunction with our consolidated financial statements and other disclosures included in this annual report.

Revenue Recognition

Application Store Revenues

We recognize application store revenue on a gross basis and recognize the commissions retained by the mobile service providers and mobile network operators as cost of revenues in our consolidated
statements of profit or loss and other comprehensive income. We recognize revenue when it is probable that the economic benefits will flow to us, revenue can be measured reliably and collectability is reasonably assured.

We generate revenue primarily through users purchase of in-app virtual items, premium features and other content. Handset users
can browse and download mobile applications and content from our application stores, Maopao App Store and Maopao Game Center. We have cooperation agreements with handset companies to pre-install our Maopao platform products on handsets before they
reach users.

The applications and content are predominantly delivered to customers through mobile network operators in
China. We contract with mobile service providers, who further contract with and utilize mobile network operators billing channels, to collect payment from our customers on our behalf. Mobile service providers and mobile network operators,
through the mobile service providers, are entitled to commissions, which are a percentage of the gross fees collected from our customers by the mobile network operators. In addition, we contract directly with all three dominant mobile network
operators in China to collect payment from our customers.

For revenues from the sale of in-app virtual items, premium
features and other content from our application stores, we recognize revenue on a gross basis at the time each purchase is successfully made and collectability is reasonably assured. We recognize the commissions retained by mobile service providers
and mobile network operators as a cost of revenues in our consolidated statements of profit or loss and other comprehensive income.

Users purchase in-game virtual premium items in certain single-player games. As the virtual items are immediately consumed, we recognize revenue upon consumption.

Maopao Community Revenues

Maopao Community revenues are derived from user purchase of in-game virtual items having an unlimited life. We collect Maopao Community revenues through payment processing agents and mobile service
providers, who are entitled to a commission for processing customer prepayments. Such revenues are initially deferred and are subsequently recognized following the historical user retention pattern over the estimated consumption period of the
durable virtual items, ranging from one to twelve months. The user retention pattern and consumption period are estimated based on the historical data and log-in patterns of paying users, including the average period paying users typically stay
active in the Maopao Community. We assess these estimates at the end of every reporting period.

Other Revenues

Other revenues include (i) commissions from content providers, mobile service providers and mobile network operators
who distribute mobile application and other content through our Maopao platform, which are recorded upon receipt of monthly statements from the content providers, service providers and mobile network operators, and (ii) application store
revenues from overseas collected through local mobile service providers, which are recorded upon acknowledgement of successful downloads from these mobile service providers.



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Taxation

We estimate income tax expense for each jurisdiction in which we operate and for each period presented, which includes estimating current tax exposure as well as assessing realizable deferred tax assets
and deferred tax liabilities.

As of March 31, 2012 ,2013 and 2014, our deferred tax assets were RMB2.2 million, RMB1.8
million and RMB2.0 million (US$0.3 million), respectively, primarily resulting from temporary differences between accounting and tax bases. We recognize deferred income taxes for temporary differences between the tax basis of assets and liabilities
and their reported amounts in the consolidated financial statements, as net operating loss carry forwards and credits, by applying enacted statutory tax rates applicable to future years. In the event we were to determine that we would be able to
realize our deferred tax assets in the future in excess of their recorded amount, an adjustment to the carrying amount of our deferred tax assets would increase our net income in the period in which such determination was made. Likewise, if we
determined that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the carrying amount of our deferred tax assets would be charged to our consolidated statements of profit or loss and other
comprehensive income in the period in which such determination is made.

We consider positive and negative evidence to
determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the
duration of statutory carry forward periods, our experience with tax attributes expiring unused and tax planning alternatives. Our ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carry
forward periods provided for in the tax law. As of March 31, 2014, no deferred tax assets had been recognized in respect of tax losses of RMB42.9 million (US$6.9 million).

Impairment of investments in associates

We assess the impairment
of our equity investments accounted for under the equity method by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies, including current earnings trends and
undiscounted cash flows, and other company-specific information, such as recent financing rounds. The fair value determination, particularly for investments in privately held companies whose revenue models remain unclear, requires significant
judgment to determine appropriate estimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investments. If any impairment exists, we will write down the investment to its fair value
and take a corresponding charge to our consolidated statements of profit or loss and other comprehensive income. Any reversal of impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

Consolidation of SPEs

PRC laws restrict foreign ownership of telecommunication businesses. To comply with the PRC laws, we conduct substantially all of our telecommunication business through our SPEs and their subsidiaries.
Through two of our subsidiaries in the PRC, we have entered into contractual arrangements with each of our SPEs and their shareholders, such that they are considered special purpose entities that we control. We believe we have substantive
termination rights pursuant to the purchase option agreements, which allow us to control the shareholders of these SPEs. We believe that the purchase option agreements are currently exercisable and legally enforceable under PRC law.

We also believe that the amount of consideration to exercise the option under PRC law does not represent a financial barrier or
disincentive for us to exercise our rights under the purchase option agreements. Under the powers of attorney entered into by each of the shareholders of the SPEs, each of the shareholders of the SPEs irrevocably grants any person designated by us
the power to exercise all voting rights of the shareholders of the SPEs. We believe this gives us the power to direct the activities that most significantly impact the SPEs economic performance. We believe that our ability to exercise
effective control, together with the exclusive business cooperation agreements or service agreements and equity pledge agreements, entitles us to receive substantially all of the economic benefits from the SPEs in consideration for the services
provided by our PRC subsidiaries. Accordingly, in accordance with IFRS, we consolidate their financial results and assets and liabilities in our consolidated financial statements.

We believe that our contractual arrangements with the SPEs could limit our ability to enforce these contractual arrangements and the
interests of the shareholders of the SPEs may diverge from those of our company. This may potentially increase the risk that they would seek to act contrary to the contractual terms of these agreements, for example by influencing the SPEs not to pay
the service fees when required to do so. See Item 3. Key Information  D. Risk Factors  Risks Relating to Doing Business in China  Our Contractual arrangements with our SPEs and their respective shareholders may not be as
effective in providing control over these entities as direct ownership.



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Consolidated Results of Operations

The following table sets forth a summary of our consolidated results of operations by amount and as a percentage of our total revenues
for the periods indicated. This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of
the results that may be expected for any future period.



|                                                                              |  |                                                            |          |   |      |  |       |      |  |  |          |   |  |     |       |   |     |  |          |   |  |  |         |   |  |  |       |  
|----------------------------------------------------------------------------- |  | ---------------------------------------------------------- | -------- | - | ---- |  | ----- | ---- |  |  | -------- | - |  | --- | ----- | - | --- |  | -------- | - |  |  | ------- | - |  |  | ----- | -
|                                                                              |  | For the Year Ended March 31,                               |         
|                                                                              |  | 2012                                                       |          |   | 2013 |  |       | 2014 | 
|                                                                              |  | RMB                                                        |          |   | %    |  |       | RMB  |  |  | %        |   |  | RMB |       |   | US$ |  |          | % | 
|                                                                              |  | (in thousands, except number of shares and per share data) |         
|Consolidated Statements of Profit or Loss and Other Comprehensive Income Data |  |                                                            |          |   |      |  |       |      |  |  |          |   |  |     |       |   |     |  |          |   |  |  |         |   |  |  |       |  
|Revenues                                                                      |  |                                                            | 685,563  |   |      |  | 100.0 |      |  |  | 601,107  |   |  |     | 100.0 |   |     |  | 485,551  |   |  |  | 78,108  |   |  |  | 100.0 |  
|Cost of revenues from third parties                                           |  |                                                            | (465,479 | ) |      |  | (67.9 | )    |  |  | (412,246 | ) |  |     | (68.6 | ) |     |  | (339,982 | ) |  |  | (54,691 | ) |  |  | (70.0 | )
|Cost of revenues from related parties                                         |  |                                                            | (5,546   | ) |      |  | (0.8  | )    |  |  | (6,534   | ) |  |     | (1.1  | ) |     |  | (24,453  | ) |  |  | (3,934  | ) |  |  | (5.1  | )
|                                                                              |  |                                                            |          |   |      |  |       |      |  |  |          |   |  |     |       |   |     |  |          |   |  |  |         |   |  |  |       |  
|                                                                              |  |                                                            |          |   |      |  |      
|Gross profit                                                                  |  |                                                            | 214,538  |   |      |  | 31.3  |      |  |  | 182,327  |   |  |     | 30.3  |   |     |  | 121,116  |   |  |  | 19,483  |   |  |  | 24.9  |  
|                                                                              |  |                                                            |          |   |      |  |       |      |  |  |          |   |  |     |       |   |     |  |          |   |  |  |         |   |  |  |       |  
|                                                                              |  |                                                            |          |   |      |  |      
|Research and development expenses                                             |  |                                                            | (71,088  | ) |      |  | (10.4 | )    |  |  | (73,027  | ) |  |     | (12.1 | ) |     |  | (38,644  | ) |  |  | (6,216  | ) |  |  | (8.0  | )
|Sales and marketing expenses                                                  |  |                                                            | (37,361  | ) |      |  | (5.4  | )    |  |  | (35,369  | ) |  |     | (5.9  | ) |     |  | (36,351  | ) |  |  | (5,848  | ) |  |  | (7.5  | )
|General and administration expenses                                           |  |                                                            | (83,996  | ) |      |  | (12.3 | )    |  |  | (69,491  | ) |  |     | (11.6 | ) |     |  | (58,401  | ) |  |  | (9,395  | ) |  |  | (12.0 | )
|Other operating income, net                                                   |  |                                                            | 3,675    |   |      |  | 0.5   |      |  |  | 2,320    |   |  |     | 0.4   |   |     |  | 5,772    |   |  |  | 929     |   |  |  | 1.2   |  
|                                                                              |  |                                                            |          |   |      |  |       |      |  |  |          |   |  |     |       |   |     |  |          |   |  |  |         |   |  |  |       |  
|                                                                              |  |                                                            |          |   |      |  |      
|Profit (loss) from operations                                                 |  |                                                            | 25,768   |   |      |  | 3.8   |      |  |  | 6,760    |   |  |     | 1.1   |   |     |  | (6,508   | ) |  |  | (1,047  | ) |  |  | (1.4  | )
|Other gains and losses                                                        |  |                                                            | 11,649   |   |      |  | 1.7   |      |  |  | 15,531   |   |  |     | 2.6   |   |     |  | 17,482   |   |  |  | 2,812   |   |  |  | 3.6   |  
|Impairment of investment in associates                                        |  |                                                            |         |   |      |  |      |      |  |  | (1,367   | ) |  |     | (0.2  | ) |     |  | (727     | ) |  |  | (117    | ) |  |  | (0.1  | )
|Impairment of an available-for-sale investment                                |  |                                                            |         |   |      |  |      |      |  |  |         |   |  |     |      |   |     |  | (800     | ) |  |  | (129    | ) |  |  | (0.2  | )
|Share of results of associates                                                |  |                                                            | (886     | ) |      |  | (0.1  | )    |  |  | (935     | ) |  |     | (0.2  | ) |     |  | 2,428    |   |  |  | 391     |   |  |  | 0.5   |  
|Profit before tax                                                             |  |                                                            | 36,531   |   |      |  | 5.3   |      |  |  | 19,989   |   |  |     | 3.3   |   |     |  | 11,875   |   |  |  | 1,910   |   |  |  | 2.4   |  
|                                                                              |  |                                                            |          |   |      |  |       |      |  |  |          |   |  |     |       |   |     |  |          |   |  |  |         |   |  |  |       |  
|                                                                              |  |                                                            |          |   |      |  |      
|Income tax expense                                                            |  |                                                            | (3,602   | ) |      |  | (0.5  | )    |  |  | (2,733   | ) |  |     | (0.4  | ) |     |  | (7,218   | ) |  |  | (1,161  | ) |  |  | (1.4  | )
|                                                                              |  |                                                            |          |   |      |  |       |      |  |  |          |   |  |     |       |   |     |  |          |   |  |  |         |   |  |  |       |  
|Profit for the year                                                           |  |                                                            | 32,929   |   |      |  | 4.8   |      |  |  | 17,256   |   |  |     | 2.9   |   |     |  | 4,657    |   |  |  | 749     |   |  |  | 1.0   |  

Fiscal Year Ended March 31, 2014 Compared to Fiscal Year Ended March 31, 2013

Revenues decreased by 19.2%, or RMB115.6 million, to RMB485.6 million (US$78.1 million) in fiscal 2014 from RMB601.1 million in fiscal
2013, primarily due to the continued decline in our feature phone business, partially offset by the stronger than expected growth in our smartphone business.

Application store revenues decreased by 28.6%, or RMB109.3 million, from RMB381.6 million in fiscal 2013 to RMB272.3 million (US$43.8 million) in fiscal 2014, primarily due to the continued decline in our
feature phone business, partially offset by the stronger than expected growth in our smartphone business. Our cumulative number of users increased from approximately 1.2 billion as of March 31, 2013 to approximately 1.4 billion as of
March 31, 2014, among which approximately 147.3 million were smartphone users. Average revenue per download on Maopao platform increased due to improved content installations. See  Factors Affecting Our Results of Operations
 Our ability to address challenges associated with policy changes and mobile network operators business practices. We have invested significantly in further expanding our content offerings with more diversified applications and
licensed games from third party developers in China.

Our Maopao Community revenues decreased by 18.9%, or RMB33.6 million,
from RMB177.7 million in fiscal 2013 to RMB144.0 million (US$23.2 million) in fiscal 2014, primarily due to the continued decline in our feature phone business. We expect that our Maopao Community revenues to continue to represent a significant
percentage of total revenues in the near future as we focus on increasing the average revenue per user in our Maopao Community and migrating our feature phone Maopao Community users to smartphones.



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Other revenues increased by 65.3%, or RMB27.3 million, from RMB41.9 million in fiscal 2013
to RMB69.2 million (US$11.1 million) in fiscal 2014, primarily attributable to our increased distribution of applications and contents from content providers, mobile service providers and mobile network operators through our Maopao platform.

Cost of Revenues. Cost of revenues decreased by 13.0%, or RMB54.3 million, from RMB418.8 million in fiscal 2013 to
RMB364.4 million (US$58.6 million) in fiscal 2014, primarily attributable to (i) the decline in our feature phone business and (ii) decreased payment channel costs as we have been increasingly collaborating directly with mobile network
operators to collect sales proceeds.

Gross Profit. As a result of the foregoing, gross profit decreased by 33.6%, or
RMB61.2 million, from RMB182.3 million in fiscal 2013 to RMB121.1 million (US$19.5 million) in fiscal 2014. Our gross margin was 24.9% in fiscal 2014, compared to 30.3% in fiscal 2013, primarily due to the higher revenue contribution of our
smartphone business in fiscal 2014 which generally has a lower profit margin as we generally offer more attractive revenue sharing propositions to our smartphone business partners, in an effort to facilitate our transition to the smartphone
business.

Operating Expenses. Operating expenses decreased by 27.3%, or RMB47.9 million, from RMB175.6 million in
fiscal 2013 to RMB127.6 million (US$20.5 million) in fiscal 2014. The decrease in our operating expenses was primarily due to the decrease in total headcount for our declining feature phone business and our efforts to enhance labor efficiency.



| |  |  | Sales and marketing expenses increased by 2.8%, or RMB1.0 million, to RMB36.4 million (US$5.8 million) in fiscal 2014 from RMB35.4 million in fiscal
2013, primarily due to increased sales and marketing activities to promote our Maopao brand and smartphone business. The number of our sales and marketing employees increased from 111 as of March 31, 2013 to 128 as of March 31, 2014. In
fiscal 2014, we recorded RMB3.6 million (US$0.6 million) in share-based compensation under sales and marketing expenses, which increased by RMB1.5 million from RMB2.1 million in fiscal 2013.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | General and administration expenses decreased by 16.0%, or RMB11.1 million, from RMB69.5 million in fiscal 2013 to RMB58.4 million (US$9.4 million) in
fiscal 2014, primarily due to our strengthened cost control efforts. In fiscal 2014, we recorded RMB8.7 million (US$1.4 million) in share-based compensation under general and administration expenses, which decreased by RMB5.3 million from RMB14.0
million in fiscal 2013.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Research and development expenses decreased by 47.1%, or RMB34.4 million, from RMB73.0 million in fiscal 2013 to RMB38.6 million (US$6.2 million) in
fiscal 2014, primarily due to decreased headcount for our research and development personnel as we balanced recourses between the smartphone and feature phone businesses. Our research and development staff decreased from 218 as of March 31,
2013 to 157 as of March 31, 2014. In fiscal 2014, we recorded RMB4.3 million (US$0.7 million) in share-based compensation under research and development expenses, which decreased by RMB1.6 million from RMB5.9 million in fiscal 2013.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Profit (loss) from Operations. As a result of the foregoing, we incurred loss from operations of
RMB6.5 million (US$1.0 million) in fiscal 2014, compared to profit from operations of RMB6.8 million in fiscal 2013.

Other Gains and Losses. Other gains increased by 12.6%, or RMB2.0 million, from RMB15.5 million in fiscal 2013 to RMB17.5 million
(US$2.8 million) in fiscal 2014. The increase in other gains was primarily attributable to income on short-term investments of RMB2.6 million (US$0.4 million), which related to a fixed-income financial product we purchased from a Chinese bank,
partially offset by a 1.8% decrease in interest income from RMB16.2 million in fiscal 2013 to RMB15.9 million (US$0.3 million) in fiscal 2014.

Impairment of Investment in Associates.Impairment of investment in associates in fiscal 2014 primarily related to our investment in Dream Sky due to its poor business performance and negative
discounted cash flow forecast. Impairment of investment in an associate in fiscal 2013 primarily related to our investment in DigiMobi due to its poor business performance and negative discounted cash flow forecast. We did not incur such impairment
for fiscal 2012.

Share of Results of Associates. Our share of results of associates increased from RMB0.9 million in
fiscal 2013 to RMB2.4 million (US$0.4 million) in fiscal 2014, primarily attributable to our investments in Shanghai Fangcun Information Technology Co., Ltd. and eight additional associates in fiscal 2014, all of which are private companies
primarily engaged in wireless technology development and related applications in the PRC.



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Profit before Tax.As a result of the foregoing, our profit before tax decreased by
40.6%, or RMB8.1 million (US$1.3 million), from RMB20.0 million in fiscal 2013 to RMB11.9 million (US$1.9 million) in fiscal 2014.

Income Tax Expense. Our income tax expenses increased by 164.1%, or RMB4.5 million (US$0.7 million), from RMB2.7 million in fiscal 2013 to RMB7.2 million (US$1.2 million) in fiscal 2014. The
increase in our income tax expenses was primarily due to additional income tax expenses triggered by the inter-group transfer of an associate due to our change of investment strategy. Such additional income tax was paid to the relevant tax bureau in
April 2014.

Profit for the Year.As a result of the foregoing, profit for the year decreased from RMB17.3 million in
fiscal 2013 to RMB4.7 million (US$0.7 million) in fiscal 2014.

Fiscal Year Ended March 31, 2013 Compared to Fiscal Year Ended
March 31, 2012

Revenues. Revenues decreased by 12.3%, or RMB84.5 million, to RMB601.1 million in fiscal
2013 from RMB685.6 million in fiscal 2012, primarily due to a decrease in application store revenues.

Application store
revenues decreased by 30.1%, or RMB164.5 million, from RMB546.1 million in fiscal 2012 to RMB381.6 million in fiscal 2013, primarily due to fewer user visits and downloads as a result of the anticipated ongoing decline in the feature phone market.
Our cumulative number of users from January 1, 2007 increased from 655 million as of March 31, 2011 to 1.2 billion as of March 31, 2013. Average revenue per download in feature phone application store increased due to improved
content installations. See  Factors Affecting Our Results of Operations  Our ability to address challenges associated with policy changes and mobile network operators business practices. The price we typically
charged for our application and content offerings did not change between these two periods. However, we introduced more packages of applications and content that users were able to download for a flat fee.

Our Maopao Community revenues increased by 60.7%, or RMB67.1 million, from RMB110.5 million in fiscal 2012 to RMB177.7 million in fiscal
2013, primarily due to the increased spending per active member resulting from our two most popular mobile social games, Fantasy of Three Kingdoms and Fairy Magic World, despite a decrease in the number of active members and
log-ins. We expect that our Maopao Community revenues will contribute an increasing percentage of total revenues in future quarters as we focus on growing our active mobile community member base and diversifying revenue collection methods away from
the traditional carrier-based payment channels. The Maopao Community offers mobile social games and other social network applications enabling user interaction.

Other revenues increased by 44.8%, or RMB13.0 million, from RMB28.9 million in fiscal 2012 to RMB41.9 million in fiscal 2013, primarily because of our strengthened efforts in developing our promotional
services on the Maopao platform as well as the growth of our application store and related services outside of China.

Cost of Revenues. Cost of revenues decreased by 11.1%, or RMB52.2 million, to RMB418.8 million in fiscal 2013 from
RMB471.0 million in fiscal 2012, primarily due to reduced channel costs, which were in line with the decline in revenues.

Gross Profit. As a result of the foregoing, gross profit decreased by 15.0%, or RMB32.2 million, to RMB182.3 million in
fiscal 2013 from RMB214.5 million in fiscal 2012. Our gross margin was 30.3% in fiscal 2013, compared to 31.3% in fiscal 2012, primarily due to RMB27.3 million accrued costs payable for content and handset software design being reversed into
cost of sales upon the expiration of the statute of limitations in the fiscal year ended March 31, 2012, partially offset by our direct cooperation with mobile operators.

Operating Expenses. Operating expenses decreased by 7.0%, or RMB13.2 million, to RMB175.6 million in fiscal 2013 from
RMB188.8 million in fiscal 2012. The decrease in our operating expenses was primarily due to the decrease in headcount.



| |  |  | Sales and marketing expenses decreased by 5.3%, or RMB2.0 million, to RMB35.4 million in fiscal 2013 from RMB37.4 million in fiscal 2012,
primarily due to our efforts to enhance labor efficiency. Our sales and marketing employees increased to 111 as of March 31, 2013 from 80 as of March 31, 2012. In fiscal 2013, we allocated RMB2.1 million in share-based compensation under
sales and marketing expenses, which decreased by RMB1.5 million from RMB3.6 million in fiscal 2012.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | General and administration expenses decreased by 17.3%, or RMB14.5 million, to RMB69.5 million in fiscal 2013 from RMB84.0 million in fiscal
2012, primarily due to lower management bonuses and our efforts to enhance labor efficiency. In fiscal 2013, we allocated RMB14.0 million in share-based compensation under general and administration expenses, which decreased by RMB16.7 million from
RMB30.7 million in fiscal 2013.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Research and development expenses increased by 2.7%, or RMB1.9 million, to RMB73.0 million in fiscal 2012 from RMB71.1 million in fiscal
2012, primarily due to more resources devoted to research and development of our smartphone business. Our research and development staff decreased to 218 as of March 31, 2013 from 239 as of March 31, 2012. In fiscal 2013, we allocated
RMB5.9 million in share-based compensation under research and development expenses, which decreased by RMB2.6 million from RMB8.5 million in fiscal 2012.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Profit from Operations.As a result of the foregoing, profit from operations decreased by 73.8%, or RMB19.0 million, to RMB6.8 million in fiscal 2013 from RMB25.8 million in fiscal 2012.

Other Gains and Losses. We had other gains of RMB15.5 million in fiscal 2013, compared to other gains of
RMB11.6 million in fiscal 2012. The other gains in fiscal 2013 were primarily related to interest income of RMB16.2 million, partially offset by an exchange loss of RMB0.4 million. The other gains in fiscal 2012 primarily related to interest
income of RMB12.1 million and a government grant of RMB2.3 million for our successful public offering in December 2010, partially offset by an exchange loss of RMB3.3 million.

Impairment of investment in an associate. Impairment of investment in an associate in fiscal 2011 primarily related to our
investment in Guanzhun, due to its continuing poor business performance and negative discounted cash flow forecast. Impairment of investment in an associate in fiscal 2013 primarily related to our investment in DigiMobi, due to its poor business
performance and negative discounted cash flow forecast. We did not incur such impairment for the fiscal year ended March 31, 2012.

Finance Costs.Finance costs were RMB4.3 million in fiscal 2011 due to distributions payable to our preferred shareholders. We did not incur finance costs for the fiscal years ended
March 31, 2012 and 2013.

Share of Results of Associates. Our share of results of associates amounted to RMB0.9
million in fiscal 2013 and RMB0.9 million in fiscal 2012 and related to thirteen and four of our associates, respectively, that are non-listed companies primarily engaged in wireless technology development and related applications in the PRC.

Profit before Tax.As a result of the foregoing, we had profit before tax of RMB20.0 million in fiscal 2013. We had
profit before tax of RMB36.5 million in fiscal 2012.

Income Tax Benefit (Expense).We had an income tax expense
of RMB2.7 million in fiscal 2013, compared to an income tax expense of RMB3.6 million in fiscal 2012.

Profit for the
Year.As a result of the foregoing, profit for the fiscal year 2013 was RMB17.3 million, compared to a profit of RMB32.9 million in fiscal 2012.



|B. | Liquidity and Capital Resources
|-- | -------------------------------

We have financed our operations primarily through cash generated from operations, the issuance of Series A preferred shares and our initial public offering. All of our Series A preferred shares were
automatically converted into common shares immediately upon the completion of our initial public offering in December 2010. Our cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal
or use, and which have maturities of three months or less when purchased. As of March 31, 2012, 2013 and 2014, we had RMB137.5 million, RMB135.0 million and RMB79.1 million (US$12.7 million) in cash and cash equivalents, respectively.

As a holding company, we may rely on dividends and other distributions from our PRC subsidiaries for our cash requirements.
PRC regulations permit our subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries and SPEs in China is
required to set aside at least 10% of its after tax profits, as determined on a calendar year basis and in accordance with relevant accounting principles and financial regulations applicable to enterprises established in the PRC (PRC
GAAP), if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. The statutory reserve, equal to RMB1.0 million as of March 31, 2014, is the same under both PRC GAAP and IFRS and is reflected as
statutory reserve in the consolidated statements of changes in equity in our consolidated financial statements. These reserves are not distributable as cash dividends. The difference between net profit, as determined under PRC GAAP, and the amount
allocated to statutory reserve, for each of our subsidiaries and SPEs in China, represents amounts that are free of restriction.



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Such amounts differ from subsidiary or SPE equity less statutory reserve as determined
under IFRS due to accounting differences between PRC GAAP and IFRS. The aggregate retained earnings of our PRC subsidiaries and SPEs after setting aside required statutory reserve funding, determined in accordance with PRC GAAP, amounted to RMB267.6
million (US$43.0 million) as of March 31, 2014. However, the amount of retained earnings distributable to our offshore entities may be less than such amounts, as any dividend distribution may be subject to relevant taxes in the PRC when our
SPEs make payments to our PRC subsidiaries under contractual arrangements and when our PRC subsidiaries distribute dividends to the offshore entities. As discussed in Item 8. Financial Information  A. Consolidated Statements and Other
Financial Information  Dividend Policy, we do not plan to declare and pay any dividends on our shares or ADSs in the near future and currently intend to retain most, if not all, of our available funds and any future earnings to operate
and expand our business. Furthermore, if our PRC subsidiaries incur debt in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.

Prior to July 1, 2010, we received economic benefits generated from our SPEs through various contractual arrangements entered into
by Pusida, our PRC subsidiary, with the SPEs. On July 1, 2010, through Dianneng, our other PRC subsidiary, we entered into contractual arrangements with Hangzhou Sky, Mijia and their respective shareholders to replace their previous contractual
arrangements with Pusida. Such contractual arrangements include technical support service agreements, strategy consulting service agreements and intellectual property license agreements with Hangzhou Sky and Mijia, respectively, and an exclusive
business cooperation agreement with Fanyi.

In addition, in February 2011, through Dianneng, we entered into similar
contractual arrangements with Feineng and its shareholders, including a technical support service agreement, strategy consulting service agreement and intellectual property license agreement. In December 2011, through Tiandian, our PRC subsidiary,
we entered into contractual arrangements with Sky Investment and its shareholder, including a technical support service agreement, strategy consulting service agreement and intellectual property license agreement. In December 2012, through Dianneng,
we entered into similar contractual arrangements with each of Najia, Miyi and Tianchu and their respective shareholders, including a technical support service agreement, strategy consulting service agreement and intellectual property license
agreement. During the fiscal year ended March 31, 2014, through Dianneng, we entered into similar contractual arrangements with each of Zunqi, Geyuan, Kaimi, Dangyi and their respective shareholders, including a technical support service
agreement, strategy consulting service agreement and intellectual property license agreement. Under these contractual arrangements, our SPEs pay their earnings in the form of services fees and royalties to our PRC subsidiaries. Our PRC subsidiaries
pay their earnings to our offshore intermediate holding company primarily through dividends.

The following table sets forth
a summary of our net cash flows for the periods indicated:



|                                                    |  |                              |          |   |      |  |         |      |  |  |         |   |  |  |         |  
|--------------------------------------------------- |  | ---------------------------- | -------- | - | ---- |  | ------- | ---- |  |  | ------- | - |  |  | ------- | -
|                                                    |  | For the Year Ended March 31, |         
|                                                    |  | 2012                         |          |   | 2013 |  |         | 2014 | 
|                                                    |  | RMB                          |          |   | RMB  |  |         | RMB  |  |  | US$     |  
|                                                    |  | (in thousands)               |         
|Net cash provided by operating activities           |  |                              | 57,095   |   |      |  | 73,289  |      |  |  | 47,846  |   |  |  | 7,697   |  
|Net cash used in investing activities               |  |                              | (283,889 | ) |      |  | (54,543 | )    |  |  | (76,051 | ) |  |  | (12,235 | )
|Net cash provided by (used in) financing activities |  |                              | 384      |   |      |  | (20,830 | )    |  |  | (25,818 | ) |  |  | (4,153  | )
|Net decrease in cash and cash equivalents           |  |                              | (226,410 | ) |      |  | (2,084  | )    |  |  | (54,023 | ) |  |  | (8,691  | )
|Cash and cash equivalents at beginning of year      |  |                              | 367,214  |   |      |  | 137,538 |      |  |  | 135,025 |   |  |  | 21,721  |  
|Effect of foreign exchange rate changes             |  |                              | (3,266   | ) |      |  | (429    | )    |  |  | (1,945  | ) |  |  | (313    | )
|                                                    |  |                              |          |   |      |  |         |      |  |  |         |   |  |  |         |  
|                                                    |  |                              |          |  
|Cash and cash equivalents at end of year            |  |                              | 137,538  |   |      |  | 135,025 |      |  |  | 79,057  |   |  |  | 12,717  |  
|                                                    |  |                              |          |   |      |  |         |      |  |  |         |   |  |  |         |  

Cash provided by operating activities was RMB57.1 million, RMB73.3 million and RMB47.8 million (US$7.7
million) in the fiscal years ended March 31, 2012, 2013 and 2014, respectively. The decrease in the fiscal year ended March 31, 2014 was primarily attributable to a decrease in profit before tax resulted from (i) the continued decline
in our feature phone business, and (ii) the higher revenue contribution of our smartphone business, which generally has a lower gross margin. The increase in the fiscal year ended March 31, 2013 was primarily attributable to cost savings
from direct cooperation with China Mobile on the game platform. The decrease in the fiscal year ended March 31, 2012 was primarily attributable to a lower gross margin resulting from increased revenue sharing percentages with industry
participants and faster payments because of the abundant cash-on-hand. The turnover days of trade receivables remained stable during all years. For a detailed reconciliation of our net income to net cash provided by operating activities, please
refer to our consolidated cash flow statements contained in this annual report.



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We had RMB76.0 million (US$12.2 million) net cash used in investing activities for the
fiscal year ended March 31, 2014 primarily due to RMB215.0 million (US$34.6 million) in purchase of investment at FVTPL and short-term investments, a RMB50.2 million (US$8.1 million) investment in associates, and RMB2.0 million (US$0.3 million)
in purchases of property and equipment, partially offset by a RMB177.5 million (US$28.5 million) decrease in term deposits and a RMB12.8 million (US$2.1 million) interest income received. We had RMB54.5 million net cash used in investing activities
for the fiscal year ended March 31, 2013 primarily due to a RMB34.9 million increase in term deposits, a RMB32.1 million increase in investment in payment of investment in associates and available-for-sale investments, and RMB3.4 million in
purchases of property and equipment, partially offset by a RMB16.2 million interest income received. We had RMB283.9 million net cash used in investing activities for the fiscal year ended March 31, 2012 primarily due to RMB285.7 million
increase of term deposits and RMB11.3 million purchases of property and equipment, partially offset by RMB12.1 million in interest income.

We had RMB25.8 million (US$4.2 million) net cash used in financing activities for the fiscal year ended March 31, 2014, primarily consisting of RMB34.2 million (US$5.5 million) in payments for
repurchase of common shares, partially offset by RMB7.1 million (US$1.1 million) from the exercise of share options and RMB1.2 million (US$0.2 million) of capital contributions from non-controlling interests. We had RMB20.8 million net cash used in
financing activities for the fiscal year ended March 31, 2013, primarily consisting of RMB25.3 million in payments for repurchase of common shares, partially offset by RMB2.5 million from the exercise of share options and RMB2.0 million of
capital contributions from non-controlling interests. We had RMB0.4 million net cash provided by financing activities for the fiscal year ended March 31, 2012 due to the capital contribution from non-controlling interests.

Capital Expenditures

We had capital expenditures of RMB11.3 million, RMB3.4 million and RMB2.0 million (US$0.3 million) in the fiscal years ended
March 31, 2012, 2013 and 2014, respectively, which were mainly used to purchase servers and computers to support the expansion of our business.

We anticipate that we will be able to meet our needs to fund operations for at least the next 12 months with operating cash flow and existing cash balances, including any investments or acquisitions we
may decide to pursue. If these sources are insufficient to satisfy cash requirements, we may seek to sell additional equity or debt securities or to obtain a credit facility. The sale of additional equity or equity-linked securities could result in
additional dilution to shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financial covenants that would restrict operations. Financing may not be available in amounts or
on terms acceptable to us, if at all.

Recently Issued Accounting Pronouncements

We have not early adopted the following new and revised standards, amendments or interpretations that have been issued but are not yet
effective.

Annual Improvements to IFRSs 2010  2012 Cycle

The Annual Improvements to IFRSs 2010  2012 Cycle include a number of amendments to various IFRSs, in which the relevant amendments
are summarized below.

The amendments to IFRS 2 (i) change the definitions of vesting condition and
market condition; and (ii) add definitions for performance condition and service condition which were previously included within the definition of vesting condition. The amendments to IFRS 2 are
effective for share-based payment transactions for which the grant date is on or after July 1, 2014.

The amendments to
the basis for conclusions of IFRS 13 clarify that the issue of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short- term receivables and payables with no stated interest rate at their invoice amounts
without discounting, if the effect of discounting is immaterial.



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Our directors anticipate that the application of the amendments included in the Annual
Improvements to IFRSs 2010  2012 Cycle will have no material impact on our consolidated financial statements.

IFRS 9
Financial Instruments

IFRS 9 issued in 2009 introduces new requirements for the classification and measurement of
financial assets. IFRS 9 was subsequently amended in 2010 to include the requirements for the classification and measurement of financial liabilities and for de-recognition, and was further amended in 2013 to include the new requirements for hedge
accounting.

Key requirements of IFRS 9 are described as follows:



| |  |  | All recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurementare subsequently measured
at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest
on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent reporting periods. In
addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in
profit or loss.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change
in the fair value of the financial liability, that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liabilitys credit risk in
other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value of financial liabilities attributable to change in the financial liabilities credit risk are not subsequently reclassified to
profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Based on our financial assets and financial liabilities as at March 31, 2014, the directors anticipate that the adoption of IFRS 9
in the future will affect the classification and measurement of our available-for-sale investments and is not likely to have significant impact on the amounts of our other financial assets and financial liabilities. Regarding our available-for-sale
investments, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

The directors anticipate that the application of the other new and revised IFRSs will have no material impact on our consolidated
financial statements.



|C. | Research and Development, Patents and Licenses, etc.
|-- | ----------------------------------------------------

We have an experienced team of engineers. As of March 31, 2014, our research and development staff consisted of 157 software, hardware and system engineers. We recruit our engineers throughout China
and have established various recruiting and training programs with leading universities in China.

Our senior management team
heads our research and development efforts and sets out strategic directions for the advancement of our offerings. Under their guidance, our research and development plans currently focus on the following areas:



| |  |  | Improving our hardware infrastructure and computational capability. In order to prevent system malfunctions and downtime that may result from our
expanding user base, we focus on investing in our hardware infrastructure and computational capability to support more mobile users concurrently accessing more diversified applications and content and interacting with each other through Maopao
Community.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Developing systematic solutions for smartphone applications along with our transition from feature phone business to smartphone business.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Developing new versions of Maopao platform products for both smartphone and feature phone operating systems, which will help expand our user base and
facilitate interaction among users.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Improving the capabilities and functionalities of Maopao platform products while enabling users with older versions of Maopao platform products to
easily access newly developed applications. We believe this will enable us to further enrich the applications available on Maopao platform and capitalize on market growth following the popularization of 3G networks. We will continue to utilize
in-house and third-party development capabilities to diversify our content portfolio, particularly video chat and video streaming related applications.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe that the improvement of our technology is vital to maintaining our long-term competitiveness. We have established laboratories for advanced mobile user experience testing, mobile applications
testing and system simulation.

In each of the three years ended March 31, 2012, 2013 and 2014, our research and
development expenses were RMB71.1 million, RMB73.0 million and RMB38.6 million (US$6.2 million), representing 10.4%, 12.1% and 8.0% of our total revenues for the fiscal years ended March 31, 2012, 2013 and 2014, respectively.



|D. | Trend Information
|-- | -----------------

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events
for the period from March 31, 2013 to March 31, 2014 that are reasonably likely to materially adversely affect our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information
to be not necessarily indicative of future operating results or financial conditions.



|E. | Off-Balance Sheet Arrangements
|-- | ------------------------------

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are
indexed to our own shares and classified as shareholders equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing,
hedging or research and development services with us.



|F. | Contractual Obligations
|-- | -----------------------

The following table sets forth our contractual obligations as of March 31, 2014:



|                            |  |                       |        |  |                 |  |        |           |  |  |           |  |  |                  |   |  |  |  |   | 
|--------------------------- |  | --------------------- | ------ |  | --------------- |  | ------ | --------- |  |  | --------- |  |  | ---------------- | - |  |  |  | - | 
|                            |  | Payment Due by Period |       
|                            |  | total                 |        |  | Less than1 year |  |        | 1-3 years |  |  | 3-5 years |  |  | More than5 years |  
|                            |  | (RMB in thousands)    |       
|Operating lease commitments |  |                       | 10,691 |  |                 |  | 9,767  |           |  |  | 924       |  |  |                  |  |  |  |  |  | 
|Capital commitments         |  |                       | 18,591 |  |                 |  | 18,591 |           |  |  |          |  |  |                  |  |  |  |  |  | 
|                            |  |                       |        |  |                
|Total                       |  |                       | 29,282 |  |                 |  | 28,358 |           |  |  | 924       |  |  |                  |  |  |  |  |  | 



|G. | Safe Harbor
|-- | -----------

This
annual report contains forward-looking statements that relate to future events, including our prospects, future operating results and future financial performance and condition, all of which are largely based on our current expectations and
projections. The forward-looking statements are contained principally in the sections entitled Item 3. Key Information  D. Risk Factors, Item 4. Information on the Company and Item 5. Operating and Financial
Review and Prospects. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by words or phrases such as
may, will, expect, anticipate, aim, estimate, intend, plan, believe, potential, continue, is/are likely
to or other similar expressions.

We have based these forward-looking statements largely on our current expectations
and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, among others, statements relating
to: our business strategies and initiatives as well as our business plans; our future business development, results of operations and financial condition; expected changes in our revenues and certain cost or expense items; our expectations with
respect to increased revenue growth and our ability to sustain profitability; our products under development or planning; our ability to attract clients and further enhance our brand recognition; and trends and competition in the mobile applications
industry.



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This annual report also contains data related to the mobile applications industry in China,
including projections that are based on a number of assumptions. The mobile applications industry in China may not grow at projected rates, or at all. The failure of the market to grow at projected rates may materially adversely affect our business
and the market price of our ADSs. In addition, the rapidly changing nature of the mobile applications industry in China subjects any projections or estimates relating to the growth prospects or future condition of our market to significant
uncertainties. If any one or more of the assumptions underlying the market projections is incorrect, our actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking
statements.

The forward-looking statements made in this annual report relate only to events or information as of the date on
which the statements are made in this annual report on Form 20-F. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise,
after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this annual report on Form 20-F in its entirety and review the factors and risks we describe in reports we will file from time to
time with the SEC after the date of this annual report. See Item 10. Additional Information  H. Documents on Display. with the understanding that our actual future results may be materially different from what we expect. Moreover,
we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.



|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- | ------------------------------------------



|A. | Directors and Senior Management
|-- | -------------------------------

The following table sets forth information regarding our directors and executive officers as of the date of this annual report. There are no family relationships among any of the directors or executive
officers of our company.



|                                 |  |     |    |  |                |                                              
|-------------------------------- |  | --- | -- |  | -------------- | ---------------------------------------------
|Directors and Executive Officers |  | Age |    |  | Position/Title
|Michael Tao Song                 |  |     | 37 |  |                | Founder, Chairman and Chief Executive Officer
|Kui Zhou                         |  |     | 46 |  |                | Independent Director                         
|Wei Zhou                         |  |     | 35 |  |                | Independent Director                         
|Jimmy Lai                        |  |     | 57 |  |                | Independent Director                         
|Carl Yeung(1)                    |  |     | 34 |  |                | Director                                     
|John Bi                          |  |     | 42 |  |                | Chief Financial Officer                      



|(1) | Mr. Carl Yeung resigned his position as our chief financial officer in October 2013 and was appointed by the board as our non-executive and non-independent
director, effective as of October 30, 2013.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Mr. Michael Tao Song is our founder,
chairman and chief executive officer. Mr. Song was appointed as a director by Xplane Ltd., a holder of our common shares. Prior to founding our company, Mr. Song worked as a product director at Eastcom Communications Co., Ltd., a
telecommunications technology company listed on the Shanghai Stock Exchange, from 2000 to 2005. Mr. Song received his bachelors degree in applied mathematics from Tianjin University in 2000.

Mr. Kui Zhou has been an independent director of our company since August 2007. Mr. Zhou was appointed as a
director by Sequoia Capital China II, L.P., our shareholder. Mr. Zhou has been a principal of Sequoia Capital China since 2005 and a partner of Sequoia Capital China since May 2007. He is also a director of VanceInfo Technologies Inc., a
China-based IT service provider listed on the New York Stock Exchange, and a director of Xiamen Changelight Co., Ltd., a China-based LED and solar cell research and manufacturing company listed on the Growth Enterprises Market of the Shenzhen Stock
Exchange. He also serves on the board of several privately held companies, including HDT Holding Technologies Inc., a China-based online advertising and marketing company; Shanghai Hintsoft Software Co., Ltd., a China-based Internet cafe software
provider; and Beijing Speedpay Technology Co., Ltd., a high-tech company committed to wireless payment and mobile e-commerce business, all of which are invested by Sequoia Capital China. Prior to joining Sequoia Capital China, Mr. Zhou served
as a senior vice president at Legend Capital from 2001 to 2005. From 1999 to 2001, he served as a manager of the corporate business development department of Legend Holdings Ltd. Mr. Zhou received his bachelors degree in electrical
automation from Wuhan Technology University in 1989 and his masters of business administration degree from Tsinghua University in 2000.



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Mr. Wei Zhou has served as our independent director since December 2010.
Mr. Zhou has served as the chief financial officer of Charm Communications Inc., a leading domestic television advertising agency in China listed on NASDAQ since November 2009. Mr. Zhou was the chief financial officer of Zhaopin Limited,
which operates a China-based online recruitment website (www.zhaopin.com), from June 2008 to October 2009. Mr. Zhou also served as Zhaopin Limiteds director of strategic planning from July 2005 to May 2007. Mr. Zhou served as an
associate director with Abax Global Capital, a Hong Kong based investment fund focusing on direct investments in private and public-sector Chinese companies, from June 2007 to May 2008. From 2001 to 2005, Mr. Zhou worked in the Hong Kong office
of Goldman Sachs in the investment banking division and the Asian Special Situations Group. Mr. Zhou received his bachelors degree from Harvard University in 2001.

Mr. Jimmy Lai became our independent director since April 2013. Mr. Lai has served as the chief financial officer of Chukong Holdings Limited, an innovative mobile
entertainment platform operator in China since August 2013. Prior to that, Mr. Lai recently served as the chief financial officer of Gamewave Group Ltd, a leading online game company in China from 2011 to 2013. Previously, he served as the
chief financial officer for several US-listed and private companies, including Daqo New Energy Corp, a leading polysilicon manufacturer based in China listed on the NYSE from 2009 to 2011, and Linktone Ltd, a leading provider of interactive
entertainment products and services in China listed on the Nasdaq from 2008 to 2009. From 2006 to 2008, Mr. Lai was the chief financial officer of Palm Commerce Holdings, a leading information technology solution provider for the China lottery
industry. Prior to that, he served as an associate vice president of investor relations at Semiconductor Manufacturing International Corporation, a company listed on the NYSE and the Main Board of the Hong Kong Stock Exchange, from 2002 to 2006, and
as a controller and director of financial planning at AMX Corporation, a leading system control company, from 1997 to 2001. Mr. Lai received his MBA degree from the University of Texas at Dallas and a bachelors degree in statistics from
the National Cheng Kung University in Taiwan. Mr. Lai is a certified public accountant licensed in the State of Texas.

Mr. Carl Yeung has been a non-executive director of the Company since October 2013. Mr. Yeung has been the chief
financial officer of BAIOO Family Interactive Limited, an online entertainment destination designed for children and listed on the HKSE, since October 2013. Mr. Yeung served as our chief financial officer since February 2010 to October 2013.
Prior to joining us, Mr. Yeung was the chief financial officer of ATA Inc., a computer-based testing and testing-related service provider based in China and listed on NASDAQ from 2006 to 2010. From 2002 to 2006, Mr. Yeung worked as an
analyst and associate at Merrill Lynch (Asia Pacific) Limited. Mr. Yeung also served as an independent non-executive director of China Natural Gas, Inc., a NASDAQ-listed integrated natural gas operator in China, from 2008 to November 2010.
Mr. Yeung received his bachelors degree in economics with concentrations in finance and operations management from the Wharton School, University of Pennsylvania, and his bachelors degree in applied science with a concentration in
systems engineering from the School of Engineering and Applied Sciences, University of Pennsylvania, in 2002.

Mr. John Bi has been our chief financial officer since October 2013. Prior to joining us, Mr. Bi held a senior
executive position at Accenture China, a global consulting firm, and served as the Chief Financial Officer to a joint venture of Accenture and China Telecom from 2012 to 2013. From February to September 2011, Mr. Bi served as the Chief
Financial Officer of Cathay Industrial Biotech, a clean-tech company based in Shanghai, China. From 2009 to 2011, he worked as the corporate finance director of Asia Timber Products, a manufacturing company owned by CVC Asia Pacific, the Asian
affiliate of CVC Capital Partners, a leading global private equity firm. From 2008 to 2009, Mr. Bi served as the Chief Financial Officer of Jingwei International Limited, and worked as a consultant to Jingwei International Limited from 2007 to
2008. In 2006, Mr. Bi was the director of corporate finance and accounting of Timken (China) Investment Co., Ltd. and from 2004 to 2006 was the financial controller of DIC (China) Co., Ltd. From 1997 to 1999, he served as the financial
controller of Lear Jiangling Interior System, Inc., a joint venture between Lear Corporation and Jiangling Motors Company (Group). From 1994 to 1997, Mr. Bi worked for Motorola (China) Electronics Ltd. as a credit analyst and a financial
analyst. Mr. Bi received an MBA from the Sprott School of Business at Carleton University in Canada in 2002 and a bachelors degree in economics from Renmin University of China in 1994 through Chinas self-study examination system
(whereby self-study examinees can receive a record of higher education by passing examinations). From 1990 to 1994, Mr. Bi studied at Yanjing Overseas Chinese University (now part of the Capital University of Economics and Business) where he
received a diploma in Financial Accounting.



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|B. | Compensation of Directors and Executive Officers
|-- | ------------------------------------------------

For the fiscal year ended March 31, 2014, we paid an aggregate of approximately RMB4.2 million (US$0.7 million) in cash to our directors and executive officers. For share-based compensation awards
granted to our directors and executive officers, see  Share Incentive Plan.

Other than the below-mentioned
statutory contributions mandated by applicable PRC law, we have not set aside or accrued any amount of cash to provide pension, retirement or other similar benefits to our officers and directors. Our PRC subsidiaries and SPEs are required by law to
make contributions equal to certain percentages of each employees salary for his or her retirement benefit, medical insurance benefits, housing funds, unemployment and other statutory benefits. Our subsidiaries and the SPEs contributed an
aggregate of approximately RMB16,021 (US$2,577) for retirement and similar benefits for our officers and directors in the fiscal year ended March 31, 2014.

Share Incentive Plan

We have adopted our 2010 Share Incentive Plan, or
the 2010 Plan, to motivate, attract, and retain employees, directors and consultants and promote the success of our business. The maximum number of common shares which could be issued pursuant to all awards under the 2010 Plan was initially
15,000,000 shares. The amount increases annually on the first business day of each calendar year by an amount equal to the lesser of (x) one percent of the number of common shares outstanding as of such date, or (y) a lesser number of
common shares determined by the compensation committee; provided, however, that no more than 15,000,000 shares may be issued upon the exercise of incentive options. As of March 31, 2014, an aggregate of 3,520,232 restricted shares and option to
purchase 2,040,778 common shares were outstanding under the 2010 Plan.

Types of Awards. The types of awards we
may grant under the 2010 Plan include, among others, options, restricted shares and restricted share units.

Plan
Administration. The compensation committee of our board of directors administers the 2010 Plan, and may delegate its administrative authority to a committee of one or more members of our board or one or more of our officers, subject to
certain restrictions. The compensation committee will designate the eligible individuals who may receive awards, and determine the types and number of awards to be granted and the terms and conditions of each award grant, including, but not limited
to, the exercise price, grant price or purchase price, any reload provision, any restrictions or limitations on the award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an award and accelerations
or waivers thereof, any provisions related to non-competition and recapture of gain on an award, based in each case on such considerations as the committee in its sole discretion determines. The compensation committee has the sole power and
discretion to cancel, forfeit or surrender an outstanding award.

Award Agreements. Options and other awards
granted under the 2010 Plan are evidenced by a written award agreement that sets forth the material terms and conditions for each grant.

Eligibility. We may grant awards to employees, consultants of a service recipient, which includes our subsidiaries or any affiliated entities designated by our board for purposes of the 2010
Plan, as well as our non-employee directors.

Acceleration of Awards upon Corporate Transactions. The
compensation committee may, in its sole discretion, upon or in anticipation of a corporate transaction, accelerate awards, purchase the awards from the holder or replace the awards.

Vesting Schedule. In general, the compensation committee determines, or the relevant award agreement specifies, the
vesting schedules.

Amendment and Termination. The compensation committee may at any time amend, modify or
terminate the 2010 Plan. Amendments to the 2010 Plan are subject to shareholder approval to the extent required by law or security exchange rules. In addition, shareholder approval is specifically required to increase the number of shares available
under the 2010 Plan, or to permit the compensation committee to extend the term or the exercise period of an option beyond ten years, or if amendments result in material increases in benefits or a change in eligibility requirements. Any amendment,
modification or termination of the 2010 Plan must not impair any rights or obligations under awards already granted without consent of the holder of such awards. Unless terminated earlier, the 2010 Plan will expire and no further awards may be
granted after the tenth anniversary of the shareholders approval of the 2010 Plan.



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The following table summarizes, as of the date of this annual report, the outstanding
options that we have granted our directors, executive officers and other individuals as a group under the 2010 Plan.



|                             |  |                                            |         |  |                           |  |      |            |  |                    |  |  |    | 
|---------------------------- |  | ------------------------------------------ | ------- |  | ------------------------- |  | ---- | ---------- |  | ------------------ |  |  | -- | 
|Name                         |  | Common SharesUnderlyingOutstanding Options |         |  | Exercise Price(US$/Share) |  |      | Grant Date |  | Expiration Date    | 
|                             |  |                                            |         | 
|Carl Yeung                   |  |                                            | *       |  |                           |  | 0.26 |            |  | September 15, 2010 |  |  | ** | 
|Zhou Wei                     |  |                                            | *       |  |                           |  | 1.00 |            |  | January 6, 2011    |  |  | ** | 
|Other individuals as a group |  |                                            | 886,453 |  |                           |  | 0.26 |            |  | March 1, 2010      |  |  | ** | 
|                             |  |                                            | 334,700 |  |                           |  | 0.26 |            |  | April 1, 2010      |  |  | ** | 
|                             |  |                                            | 268,001 |  |                           |  | 0.26 |            |  | September 15, 2010 |  |  | ** | 
|                             |  |                                            |         |  |                           |  |      |            |  |                    |  |  |    | 



|* | Less than 1% of our outstanding common shares.
|- | ----------------------------------------------

|** | The expiration date for the options is the earlier of the tenth anniversary of the grant date of such options or upon the termination of the option holders
services by reason of cause, or two years following the termination of the option holders services by reason of death or disability, or 90 days following the termination of the option holders services for any reason other than death or
disability and not for cause.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|C. | Board Practices
|-- | ---------------

Board of Directors

Our board of directors consists of five members. A director is not required to hold any shares in our company by way of
qualification. A director may vote with respect to any contract or transaction in which he or she is materially interested provided the nature of the interest is disclosed prior to its consideration and any vote on such contract or transaction. The
directors may exercise all the powers of our company to borrow money, mortgage its undertaking, property and uncalled capital, and issue debentures or other securities whether outright or as security for any debt, liability or obligation of our
company or of any third-party. None of our non-executive directors has a service contract with us that provides for benefits upon termination of employment.

Committees of the Board of Directors

We have three committees under the
board of directors: an audit committee, a compensation committee and a corporate governance and nominating committee. We have adopted a charter for each of the three committees.

Audit Committee

Our audit committee consists of Wei Zhou, Kui Zhou
and Jimmy Lai. Wei Zhou, Kui Zhou and Jimmy Lai satisfy the independence requirements of Rule 5605 of the NASDAQ Stock Market Marketplace Rules and Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Wei Zhou is the
chairman of our audit committee and meets the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC. Our audit committee oversees our accounting and financial reporting processes and the audits of the
financial statements of our company. Our audit committee is responsible for, among other things:



| |  |  | selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by our
independent registered public accounting firm;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviewing with the independent registered public accounting firm any audit problems or difficulties and managements response;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviewing and approving all proposed related-party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | discussing the annual audited financial statements with management and our independent registered public accounting firm;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | annually reviewing and reassessing the adequacy of our audit committee charter;
| | - |  | -------------------------------------------------------------------------------



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| |  |  | meeting separately and periodically with management and our independent registered public accounting firms;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | reporting regularly to the full board of directors; and
| | - |  | -------------------------------------------------------



| |  |  | such other matters that are specifically delegated to our audit committee by our board of directors from time to time.
| | - |  | ----------------------------------------------------------------------------------------------------------------------

Compensation Committee

Our compensation committee consists of Kui Zhou, Wei Zhou, and Jimmy Lai. Kui Zhou, Wei Zhou and Jimmy Lai satisfy the independence requirements of Rule 5605 of the NASDAQ Stock Market
Marketplace Rules. Our compensation committee assists the board of directors in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and
executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:



| |  |  | reviewing and making recommendations to the board with respect to the total compensation package for our four most senior executives;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | approving and overseeing the total compensation package for our executives other than the four most senior executives;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | reviewing and making recommendations to the board with respect to the compensation of our directors; and
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee
pension and welfare benefit plans.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Corporate Governance and Nominating Committee

Our corporate governance and nominating committee consists of Wei Zhou, Kui Zhou and Jimmy Lai. All of them satisfy the
independence requirements of Rule 5605 of the NASDAQ Stock Market Marketplace Rules. The corporate governance and nominating committee assists our board of directors in identifying individuals qualified to become our directors and in
determining the composition of the board and its committees. The corporate governance and nominating committee is responsible for, among other things:



| |  |  | identifying and recommending nominees for election or re-election to our board of directors, or for appointment to fill any vacancy;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviewing annually with our board of directors its current composition in light of the characteristics of independence, age, skills, experience and
availability of service to us;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | identifying and recommending to our board the directors to serve as members of committees;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with
applicable laws and regulations, and making recommendations to our board of directors on all matters of corporate governance and on any corrective action to be taken; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure
proper compliance.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

Duties of Directors

Under Cayman Islands law, our directors have a fiduciary duty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the skill they actually
possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, amended
from time to time.

Terms of Directors and Officers

Pursuant to our amended and restated memorandum and articles of incorporation, our board of directors are divided into three classes, Class A directors, Class B directors and Class C directors, who
shall retire from office and be eligible for re-election at the first, second and third annual general meeting, respectively. Mr. Michael Tao Song has been designated as a Class A director. Mr. Kui Zhou and Mr. Wei Zhou have been
designated as Class B directors. Mr. Jimmy Lai and Mr. Carl Yeung have been designated as Class C directors. At each subsequent annual general meeting after the third annual general meeting, the directors of the class who have been longest
in office shall retire and shall be eligible for re-election. A director may only be removed by the shareholders. Officers are elected by and serve at the discretion of the board of directors.



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Employment Agreements

We have entered into a three-year employment agreement with each of our executive officers. We may terminate an executive officers employment for cause, at any time, without prior notice or
remuneration, for certain acts of the officer, including, but not limited to, conviction of a crime, material violation of our rules and regulations, or other misconduct that causes material damage to us. Furthermore, an executive officer may
terminate the employment at any time upon prior written notice to us. Each executive officer is entitled to severance pay equal to a certain specified number of months of his base salary if we terminate his employment without any of the causes
specified above.

Each of our executive officers has agreed to hold in strict confidence any trade secrets or confidential
information of our company or trade secrets of any third-party received by us. Each executive officer has agreed that the intellectual property rights related to all work products, inventions, computer software, or other technological information
which he has developed while performing his duties at our company or through mainly using our resources shall belong to us. Each executive officer has agreed to assist us to obtain and exercise all such intellectual property rights.



|D. | Employees
|-- | ---------

We had 583,
489 and 453 full-time employees as of March 31, 2012, 2013 and 2014, respectively. We consider our relations with our employees to be good. The following table sets forth the number of our employees categorized by areas of operations as of
March 31, 2014:



|                                                 |  |                     |     |  |            |  |       |  
|------------------------------------------------ |  | ------------------- | --- |  | ---------- |  | ----- | -
|Function                                         |  | Number of Employees |     |  | Percentage | 
|                                                 |  |                    
|Research and development                         |  |                     | 157 |  |            |  | 34.7  |  
|Sales and marketing (including customer service) |  |                     | 128 |  |            |  | 28.3  |  
|Operations                                       |  |                     | 94  |  |            |  | 20.8  |  
|General and administration                       |  |                     | 74  |  |            |  | 16.2  |  
|                                                 |  |                     |     |  |            |  |       |  
|                                                 |  |                    
|Total                                            |  |                     | 453 |  |            |  | 100.0 | %
|                                                 |  |                     |     |  |            |  |       |  

Our success depends on our ability to attract, retain and motivate qualified personnel. We believe we
offer our employees competitive compensation packages, and we have generally been able to attract and retain qualified personnel and maintain a stable core management team. We believe that we maintain a good working relationship with our employees
and we have not experienced any significant labor disputes. For a description of the employment agreement we signed with some members of our senior management, see Item 6. Director, Senior Management and Employees  C. Board
Practices  Employment Agreements.

Substantially all of our employees are based in the PRC. In accordance with
PRC laws, our full-time employees in China participate in various employee benefit plans including pension, medical benefit plans, unemployment insurance, work-related injury insurance and childbirth insurance.

Compensation for our full-time employees typically consists of a base salary, seniority pay and other subsidies. In addition, based on
our results of operations, we may award bonuses to our employees solely at our discretion. Our employees are also eligible for equity incentives. For more information on the terms of our share incentive plan, see Item 6. Director, Senior
Management and Employees  B. Compensation of Directors and Executive Officers  Share Incentive Plan.

We hire a portion of our employees through on-campus recruiting programs at various universities, including Zhejiang University,
Zhejiang Sci-Tech University, Nanjing University, Nanjing University of Science and Technology, Huazhong University of Science and Technology, Wuhan University of Zhejiang University of Technology, Northwest Hangzhou Electronics University, and
Xian Jiaotong University.



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|E. | Share Ownership
|-- | ---------------

As of
March 31, 2014, we had 239,461,886 common shares outstanding. The following table sets forth information with respect to the beneficial ownership of our common shares as of March 31, 2014, by:



| | (1) | each of our directors and executive officers who are also our shareholders; and
| | --- | -------------------------------------------------------------------------------



| | (2) | each person known to us to own beneficially more than 5% of our common shares.
| | --- | ------------------------------------------------------------------------------



|                                                   |  |                                  |            |  |   |  |      | 
|-------------------------------------------------- |  | -------------------------------- | ---------- |  | - |  | ---- | 
|                                                   |  | Common Shares Beneficially Owned |           
|                                                   |  | Number                           |            |  | % | 
|Directors and Executive Officers:                  |  |                                  |            |  |   |  |      | 
|Michael Tao Song(1)                                |  |                                  | 74,403,473 |  |   |  | 30.8 | 
|Kui Zhou(2)                                        |  |                                  | 25,389,800 |  |   |  | 10.5 | 
|Wei Zhou(3)                                        |  |                                  |           |  |   |  |     | 
|Jimmy Lai(3)                                       |  |                                  |           |  |   |  |     | 
|Carl Yeung(3)                                      |  |                                  |           |  |   |  |     | 
|John Bi(3)                                         |  |                                  |           |  |   |  |     | 
|All Directors and Executive Officers as a Group(4) |  |                                  | 99,793,273 |  |   |  | 41.3 | 
|                                                   |  |                                 
|Principal Shareholders:                            |  |                                  |            |  |   |  |      | 
|Mobi Joy Limited(5)                                |  |                                  | 50,647,288 |  |   |  | 21.0 | 
|Xplane Ltd.(6)                                     |  |                                  | 70,234,120 |  |   |  | 29.1 | 
|Sequoia Capital China II, L.P.(7)                  |  |                                  | 21,284,280 |  |   |  | 8.8  | 
|Sequoia Capital China Principals Fund II, L.P.(7)  |  |                                  | 3,574,936  |  |   |  | 1.5  | 
|Sequoia Capital China Partners Fund II, L.P.(7)    |  |                                  | 530,584    |  |   |  | 0.2  | 



|(1) | Represents (i) 50,647,288 common shares held by Mobi Joy Limited., a British Virgin Islands company controlled by Mr. Song, and (ii) 23,756,185 common
shares held by Ms. Qinyi Zhu, wife of Mr. Song, through Xplane Ltd.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents 25,389,800 common shares held by the Sequoia Funds. Mr. Zhou disclaims beneficial ownership with respect to the shares held by the Sequoia Funds except
to the extent of his pecuniary interest therein. The business address for Mr. Zhou is Room 3606, Tower 3, China Central Place, No 77 Jianguo Road, Chaoyang District, Beijing 100025, Peoples Republic of China.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The business address for Mr. Zhou is Building No.4, Tianchang Park, Media Village, Beiyuan Road, Beijing, Peoples Republic of China. The business address for
Mr. Lai is 3A-20, Focus Square, 6 Futong East Avenue, Beijing, Peoples Republic of China. The business address for Mr. Yeung is 10/F #36 Han Zhong Road, Tianhe Software Park, Guangzhou, Guangdong, Peoples Republic of China.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Represents common shares held by all of our directors and executive officers as a group.
|--- | ----------------------------------------------------------------------------------------

|(5) | The registered address for Mobi Joy Limited is Romasco place, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola. British Virgin Islands, VG1110. Mr. Song is the
sole shareholder of Mobi Joy Limited.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | The registered address for Xplane Ltd. is Romasco Place, Wickhams Cay 1, P. O. Box 3140, Road Town, Tortola, British Virgin Islands, VG1110.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Each of the Sequoia Funds is a limited partnership incorporated in Cayman Islands. The general partner of each of the Sequoia Funds is Sequoia Capital China Management
II, L.P., whose general partner is SC China Holding Limited, a company incorporated in the Cayman Islands. SC China Holding Limited is wholly owned by Max Wealth Enterprises Limited, a British Virgin Islands company wholly owned by Neil Nanpeng
Shen. Mr. Shen disclaims beneficial ownership with respect to the shares held by each of the Sequoia Funds except to the extent of his pecuniary interest therein. Mr. Shen has voting and dispositive control over the shares being offered by
the Sequoia Funds. The address of each of the Sequoia Funds is Suite 2215, Two Pacific Place, 88 Queensway, Hong Kong, PRC.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- | -------------------------------------------------



|A. | Major Shareholders
|-- | ------------------

See
Item 6. Directors, Senior Management and Employees  E. Share Ownership.



|B. | Related Party Transactions
|-- | --------------------------

Contractual Arrangements

PRC law restricts foreign ownership of businesses providing telecommunications value-added services. To comply with PRC law, we operate
our mobile application store through Diannengs contractual arrangements with Hangzhou Sky, Mijia, Fanyi, Feineng, Miyi, Najia, Tianchu, Kaimi, Dangyi, Zunqi, Geyuan, Mugu, Feidong and Weipin and their respective shareholders, and we operate
our strategic investment business through Tiandians contractual arrangements with Sky Investment and its shareholders. See Item 4. Information on the Company  B. Organizational Structure for a description of these contractual
arrangements.

Shareholders Agreement

Pursuant to our shareholders agreement entered into in August 2007, as amended and restated, in connection with our pre-IPO preferred share financing, we have granted certain registration rights to
holders of our registrable securities, which include our common shares issued upon conversion of our preferred shares, including preferred shares issued upon exercise of our warrants. Set forth below is a description of the registration rights
granted under the agreement.

Demand Registration Rights. Holders of at least 50% of the registrable securities then
outstanding have the right to demand that we file a registration statement for at least 20% of the registrable securities then held by such holders (or any lesser percentage if the anticipated gross proceeds from the offering exceed US$5,000,000).
However, we are not obliged to effect a demand registration if we have already effected two demand registrations.

Form
F-3 or Form S-3 Registration Rights. At any time when we are eligible for registration on Form F-3 or Form S-3, holders of our registrable securities then outstanding have the right to request that we file a registration statement under Form F-3
or Form S-3. However, we are not obliged to effect any such registration if we have already effected two registrations on Form F-3 or Form S-3 for the holders within the 12-month period preceding the date of request.

Deferral of Registration. We are not obligated to effect the above demand registration or Form F-3 or Form S-3 registration
(i) if we intend to effect the filing for our own account of a registration statement of common shares within 60 days of receipt of a request, and we are actively employing in good faith our reasonable best efforts to cause such registration
statement to become effective within 60 days of initial filing, or (ii) during the period starting with the date of filing by us of, and ending six months following the effective date of, any registration statement pertaining to our common
shares, provided that in either case, the holders of registrable securities are entitled to join such registration under the piggyback registration rights described below. Furthermore, we have the right to defer filing a registration statement for
up to 90 days under demand registration rights or up to 60 days under Form F-3 or Form S-3 registration rights if we provide the requesting holders a certificate signed by our chief executive officer stating that in the good faith judgment of the
board of directors filing a registration statement will be detrimental to us and our shareholders, but we cannot exercise the deferral right more than once in any 12-month period.

Piggyback Registration Rights. If we propose to file a registration statement for a public offering of our securities other than
pursuant to a demand registration right or an F-3 or S-3 registration statement, or relating to an employee benefit plan or a corporate reorganization, then we must offer holders of registrable securities an opportunity to include in this
registration all or any part of their registrable securities.

Expenses of Registration. We will bear all registration
expenses incurred in connection with any demand, piggyback or F-3 or S-3 registration, other than any underwriting discounts and selling commissions.

Employment Agreement

We have entered into employment agreements with each
of our management members and each of the individual shareholders of Xplane Ltd. For a description of the employment agreement with our management, see Item 6. Directors, Senior Management and Employees  C. Board Practices 
Employment Agreements.



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Transactions with Certain Officers, Shareholders and Affiliates and Key Management Personnel

We license certain mobile content from our associates, namely Zhang Xing Wu Xian Technologies (Beijing) Co., Ltd., or
Zhang Xing, Hangzhou Sibi Technologies Co., Ltd., or Sibi, Beijing Brtech Co., Ltd., or Brtech, Hangzhou Breaking Dawn Network Technologies Co. Ltd., or Breaking Dawn, Hangzhou TaiKu Technologies Co. Ltd., or Taiku, Hangzhou Quyuan Technologies Co.
Ltd., or Quyuan, and Hangzhou Qianlong Technologies Co. Ltd., or Qianlong. The following table sets forth the related cost of revenues we have recorded for the periods indicated:



|              |  |                              |       |  |      |  |       |      |  |  |        |  |  |  |       | 
|------------- |  | ---------------------------- | ----- |  | ---- |  | ----- | ---- |  |  | ------ |  |  |  | ----- | 
|              |  | For the Year Ended March 31, |      
|              |  | 2012                         |       |  | 2013 |  |       | 2014 | 
|              |  | RMB                          |       |  | RMB  |  |       | RMB  |  |  | US$    | 
|              |  | (in thousands)               |      
|Zhang Xing    |  |                              | 1,822 |  |      |  | 357   |      |  |  | 81     |  |  |  | 13    | 
|Sibi          |  |                              | 3,724 |  |      |  | 2,271 |      |  |  | 1,545  |  |  |  | 249   | 
|Brtech        |  |                              |      |  |      |  | 982   |      |  |  | 349    |  |  |  | 56    | 
|Breaking Dawn |  |                              |      |  |      |  | 2,924 |      |  |  | 12,137 |  |  |  | 1,952 | 
|Taiku         |  |                              |      |  |      |  |      |      |  |  | 1,178  |  |  |  | 190   | 
|Quyuan        |  |                              |      |  |      |  |      |      |  |  | 1,875  |  |  |  | 302   | 
|Qianlong      |  |                              |      |  |      |  |      |      |  |  | 7,288  |  |  |  | 1,172 | 

We also provide pre-installation service for Qianlong and charge a commission based on the number of
active users. In the fiscal year ended March 31, 2014, we charged a total of RMB2,830,000 (US$455,250) commission from Qianlong.

In addition, we have certain amounts due to and from the related parties, namely Zhang Xing, Sibi, Brtech, Breaking Dawn, TaiKu, Quyuan, Qianlong, and Hangzhou Joyreach Technologies Co. Ltd., or Joyreach,
eight of our associates, and Xplane Ltd., our principle shareholder. The following table sets forth the amounts due to and from those related parties for the periods indicated:



|                                 |  |                                                                                  |  |                                     |     |  |      |  |       |      |  |  |       |  |  |  |     | 
|-------------------------------- |  | -------------------------------------------------------------------------------- |  | ----------------------------------- | --- |  | ---- |  | ----- | ---- |  |  | ----- |  |  |  | --- | 
|                                 |  |                                                                                  |  | For the Fiscal Year Ended March 31, |    
|                                 |  |                                                                                  |  | 2012                                |     |  | 2013 |  |       | 2014 | 
|                                 |  |                                                                                  |  | RMB                                 |     |  | RMB  |  |       | RMB  |  |  | US$   | 
|                                 |  |                                                                                  |  | (In thousands)                      |    
|                                 |  |                                                                                  |  |                                     |    
|Amounts Due from Related Parties |  | Nature of Advances or Payment                                                    |  |                                     |     |  |      |  |       |      |  |  |       |  |  |  |     | 
|Xplane Ltd.                      |  | Non-trading in nature, unsecured, interest-free advances and repayable on demand |  |                                     | 126 |  |      |  | 125   |      |  |  |      |  |  |  |    | 
|Taiku                            |  | Non-trading in nature, unsecured, interest-free advances and repayable on demand |  |                                     |    |  |      |  | 306   |      |  |  | 1     |  |  |  |    | 
|Breaking Dawn                    |  | Non-trading in nature, unsecured, interest-free advances and repayable on demand |  |                                     |    |  |      |  | 92    |      |  |  | 11    |  |  |  | 2   | 
|Qianlong                         |  | Trading in nature, unsecured, interest-free advances and repayable on demand     |  |                                     |    |  |      |  |      |      |  |  | 148   |  |  |  | 24  | 
|Amounts Due to Related Parties   |  |                                                                                  |  |                                     |     |  |      |  |       |      |  |  |       |  |  |  |     | 
|Zhang Xing                       |  | Trading in nature, unsecured, non-interest bearing and repayable on demand       |  |                                     | 274 |  |      |  | 577   |      |  |  | 604   |  |  |  | 97  | 
|Sibi                             |  | Trading in nature, unsecured, non-interest bearing and repayable on demand       |  |                                     | 597 |  |      |  | 426   |      |  |  | 211   |  |  |  | 34  | 
|Brtech                           |  | Trading in nature, unsecured, non-interest bearing and repayable on demand       |  |                                     |    |  |      |  | 127   |      |  |  | 39    |  |  |  | 6   | 
|Breaking Dawn                    |  | Trading in nature, unsecured, non-interest bearing and repayable on demand       |  |                                     |    |  |      |  | 2,924 |      |  |  | 4,662 |  |  |  | 750 | 
|Taiku                            |  | Trading in nature, unsecured, non-interest bearing and repayable on demand       |  |                                     |    |  |      |  |      |      |  |  | 587   |  |  |  | 94  | 
|Quyuan                           |  | Trading in nature, unsecured, non-interest bearing and repayable on demand       |  |                                     |    |  |      |  |      |      |  |  | 875   |  |  |  | 141 | 
|Qianlong                         |  | Trading in nature, unsecured, non-interest bearing and repayable on demand       |  |                                     |    |  |      |  |      |      |  |  | 188   |  |  |  | 30  | 
|Joyreach                         |  | Trading in nature, unsecured, non-interest bearing and repayable on demand       |  |                                     |    |  |      |  |      |      |  |  | 4,035 |  |  |  | 649 | 



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The amounts due from the Sequoia Funds represent a capital injection made by Fanyi on
behalf of the Sequoia Funds for their 15% equity interest in Hangzhou Guanzhun Technologies Co., Ltd., or Guanzhun, one of our associates. The amounts due to the Sequoia Funds represent the approved distribution payable to the Sequoia Funds which
has been recorded as finance cost.

Beijing Speedpay Technology Co., Ltd., over which our director, Mr. Kui Zhou, has
significant influence, provides payment processing service to us. In the three fiscal years ended March 31, 2012, 2013 and 2014, we paid a total of RMB1,373,000, RMB1,280,000 and RMB1,007,000 (US$161,900), respectively, to Beijing Speedpay
Technology Co., Ltd.

Pursuant to a Subscription Agreement dated October 2, 2012, we hold a limited partnership interest
representing an aggregate capital commitment of US$2 million in K2 Partners II, L.P., a private equity fund over which our independent director, Mr. Fan Bao, has significant influence. As of April 15, 2013, Mr. Bao no longer served as
our director.

Other Related Party Transactions

In June 2013, we established Hangzhou Qianlong Technology Limited, or Qianlong, with Li Ou, our former chief technology officer, to carry out mobile games development and operation related business. We
and Li Ou signed definitive agreements to contribute RMB 10.0 million and RMB 15.0 million into Qianlong, and hold a 40% equity interest and a 60% equity interest in Qianlong, respectively. We also entered into a RMB 25.0 million loan
agreement with Qianlong to fund its future operations. The loan bears a 3% annual interest rate and can only be used to develop Qianlongs business. In order to focus on the management of Qianlong and to avoid conflict of interests, Li Ou
resigned from our Company in June 2013.

In June 2013, we subscribed for additional shares in our subsidiary, Sky
Technologies International Limited, or Sky Technologies BVI, at par value. Following the share issuance, we sold a 30% equity interest in Sky Technologies BVI to Qing Yan, our former chief operating officer, and Wenjie Wu, an officer of our Company,
for cash consideration of RMB 6,000,000. Following the sale, we own 60% of the shares of Sky Technologies BVI and retain control over it. Sky Technologies BVI, through its wholly-owned subsidiary, Powerplay Technology Limited, primarily engages in
mobile application store services for overseas markets.

The above-mentioned related party transactions have been unanimously
approved by the Board, the audit committee and a special independent committee formed by the Board.

Share Incentive Plan

See Item 6. Directors, Senior Management and Employees  B. Compensation of Directors and Executive Officers  Share
Incentive Plan.



|C. | Interests of Experts and Counsel
|-- | --------------------------------

Not applicable.



|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------



|A. | Consolidated Statements and Other Financial Information
|-- | -------------------------------------------------------

We have appended consolidated financial statements as part of this annual report.



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Legal Proceedings

Mr. Carl Yeung, currently our non-executive director and our previous chief financial officer, served as an independent director and the chairman of the audit committee of China Natural Gas, Inc., or
CHNG, a Delaware corporation whose shares of common stock were listed on NASDAQ from 2008 to November 2010. CHNG and certain of its officers and directors, including Mr. Yeung, have been named as defendants in a putative class action lawsuit
alleging violations of the federal securities laws. The action, captioned Vandevelde v. China Natural Gas, Inc., et al.,No. 10-cv-00728, was filed in the United States District Court for the District of Delaware on August 26, 2010.
On August 12, 2011, the Court entered an order appointing Robert Skeway, an individual investor, as lead plaintiff and approving his selection of lead counsel.

Lead plaintiff and Raimundo Jo-Fung, another individual investor, who together seek to represent a class of all persons who purchased CHNG common stock between March 10, 2010 and September 21,
2011, filed an amended complaint on October 11, 2011. Plaintiffs assert claims for violations of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The amended complaint alleges the defendants made false or
misleading statements in CHNGs Annual Reports on Form 10-K for the years ended December 31, 2009, and December 31, 2010, and in various quarterly reports, by purportedly failing to disclose a series of loans and related party
transactions. The amended complaint also asserts claims against certain of CHNGs current and former officers and directors for violations of Section 20(a) of the Securities Exchange Act of 1934, including Mr. Yeung. The suit seeks
unspecified monetary damages. Mr. Yeung could potentially be held individually liable for civil damages in these actions.

On December 12, 2011 CHNG filed a motion to dismiss and the motion is now fully briefed. Mr. Yeung has not been served with a
copy of the summons and complaint.

Since July 27, 2012, Mr. Yeung has no longer been named as a co-defendant in
this case.

Other than the foregoing, we are not a party to any material litigation or other legal proceeding and are not
aware of any pending or threatened litigation or other legal proceeding that may materially adversely affect our business or operations.

Dividend Policy

We are
a holding company incorporated in the Cayman Islands. We may rely on dividends from our PRC subsidiaries for our cash requirements, including any payment of dividends to our shareholders. Current PRC regulations permit our PRC subsidiaries to pay
dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside a certain amount of its after-tax profits
each year, if any, to fund certain statutory reserves. These reserves are not distributable as cash dividends. Furthermore, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their
ability to pay dividends or make other payments to us.

In May 2010, we declared and paid dividends in the amount of RMB13.0
million to our common shareholders, and we also approved a distribution payable to our preferred shareholders who have participating rights in the amount of RMB4.3 million. However, we do not plan to declare and pay any dividends on our shares or
ADSs in the near future. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Our board of directors has discretion as to whether to distribute dividends, subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and
amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay any dividends, we will pay
our ADS holders to the same extent as holders of our common shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. Cash dividends on our common shares, if any, will be paid in U.S. dollars.



|B. | Significant Changes
|-- | -------------------

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited
consolidated financial statements included in this annual report.



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|ITEM 9. | THE OFFER AND LISTING
|------- | ---------------------



|A. | Offer and Listing Details
|-- | -------------------------

Our ADSs, each representing eight common shares, have been listed on NASDAQ since December 10, 2010. Our ADSs are traded under the symbol MOBI.

The following table provides the high and low trading prices for our ADSs on NASDAQ for the periods shown.



|                                        |  |             |       |  |     |  |      | 
|--------------------------------------- |  | ----------- | ----- |  | --- |  | ---- | 
|                                        |  | Sales Price |      
|                                        |  | High        |       |  | Low | 
|Annual Highs and Lows                   |  |             |       |  |     |  |      | 
|Fiscal Year ended March 31, 2013        |  |             | 3.45  |  |     |  | 1.61 | 
|Fiscal Year ended March 31, 2014        |  |             | 11.47 |  |     |  | 1.59 | 
|                                        |  |            
|Quarterly Highs and Lows                |  |             |       |  |     |  |      | 
|Third Quarter ended December 31, 2012   |  |             | 2.64  |  |     |  | 1.79 | 
|Fourth Quarter ended March 31, 2013     |  |             | 2.42  |  |     |  | 1.71 | 
|First Quarter ended June 30, 2013       |  |             | 3.44  |  |     |  | 1.59 | 
|Second Quarter ended September 30, 2013 |  |             | 4.78  |  |     |  | 3.21 | 
|Third Quarter ended December 31, 2013   |  |             | 5.53  |  |     |  | 3.05 | 
|Fourth Quarter ended March 31, 2014     |  |             | 11.47 |  |     |  | 3.89 | 
|                                        |  |            
|Monthly Highs and Lows                  |  |             |       |  |     |  |      | 
|February 2014                           |  |             | 7.20  |  |     |  | 4.14 | 
|March 2014                              |  |             | 11.47 |  |     |  | 6.82 | 
|April 2014                              |  |             | 9.40  |  |     |  | 6.83 | 
|May 2014                                |  |             | 7.31  |  |     |  | 6.08 | 
|June 2014                               |  |             | 8.28  |  |     |  | 6.28 | 
|July 2014 (through July 25, 2014)       |  |             | 8.02  |  |     |  | 6.38 | 



|B. | Plan of Distribution
|-- | --------------------

Not applicable.



|C. | Markets
|-- | -------

Our ADSs, each
representing eight common shares, have been listed on NASDAQ since December 10, 2010. Our ADSs are traded under the symbol MOBI.



|D. | Selling Shareholders
|-- | --------------------

Not applicable.



|E. | Dilution
|-- | --------

Not
applicable.



|F. | Expenses of the Issue
|-- | ---------------------

Not applicable.



|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------



|A. | Share Capital
|-- | -------------

Not
applicable.



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|B. | Memorandum and Articles of Association
|-- | --------------------------------------

We are a Cayman Islands company and our affairs are governed by our memorandum and articles of association and the Companies Law of the Cayman Islands, which is referred to as the Companies Law below.

All share and per share data have been adjusted to reflect a 100-for-1 share split that became effective on August 2,
2007 and a further 200-for-1 share split that became effective on November 18, 2010. As of the date of this annual report, our authorized share capital is US$1,000,000 consisting of 20,000,000,000 shares with par value of US$0.00005 each. The
following are summaries of material provisions of our currently effective amended and restated memorandum and articles of association and the Companies Law insofar as they relate to the material terms of our common shares. This summary is not
complete, and you should read our currently effective amended and restated memorandum and articles of association.

Registered Office

The registered office of our company is at the offices of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins
Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands or at such other place as the Directors may from time to time decide.

Board of
Directors

See Item 6.C. Board Practices  Board of Directors.

Common Shares

General. All of our outstanding common shares
are fully paid and non-assessable. Certificates representing the common shares are issued in registered form. Our shareholders who are nonresidents of the Cayman Islands may freely hold and vote their shares.

Dividends. The holders of our common shares are entitled to such dividends as may be declared by our board of directors
subject to the Companies Law and to the amended and restated articles of association.

Voting Rights. Each
common share is entitled to one vote on all matters upon which the common shares are entitled to vote. Voting at any shareholders meeting is by show of hands unless a poll is demanded. A poll may be demanded by our chairman or any shareholder,
present in person or by proxy.

A quorum required for a meeting of shareholders consists of at least two shareholders present
in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative, who hold not less than one-third of our voting share capital. An annual general meeting shall be held in each year other than the year in
which the amended and restated articles of association was adopted. Extraordinary general meetings may be held at such times as may be determined by our board of directors and may be convened by a majority of our board of directors or the chairman
of the board on its/his own initiative. Also, any one or more shareholders holding not less than 25% of our voting share capital may require an extraordinary general meeting to be called by the board of directors by written requisition to our board
of directors or secretary. Advance notice of at least 10 clear days is required for the convening of our annual general meeting and other shareholders meetings.

An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the common shares cast in a general meeting, while a special resolution
requires the affirmative vote of no less than two-thirds of the votes cast attaching to the common shares. A special resolution is required for important matters such as amendments to the memorandum and articles of association, a change of name or
voluntary liquidation. Holders of the common shares may effect certain changes by ordinary resolution, including alter the amount of our authorized share capital, consolidate and divide all or any of our share capital into shares of larger amount
than our existing share capital, and cancel any unissued shares.

Transfer of Shares. Subject to the
restrictions of our amended and restated memorandum and articles of association, as applicable, any of our shareholders may transfer all or any of his or her common shares by an instrument of transfer in the usual or common form or any other form
approved by our board.



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Our board of directors may, in its sole discretion, decline to register any transfer of any
common share which is not fully paid up or on which we have a lien. Our directors may also decline to register any transfer of any common share unless (a) the instrument of transfer is lodged with us, accompanied by the certificate for the
common shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; (b) the instrument of transfer is in respect of only one class of common
shares; (c) the instrument of transfer is properly stamped, if required; (d) in the case of a transfer to joint holders, the number of joint holders to whom the common share is to be transferred does not exceed four; (e) the shares
concerned are free of any lien in favor of us; or (f) a fee of such maximum sum as NASDAQ may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was
lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, on notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and the register closed
at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.

Liquidation. On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of
shares), assets available for distribution among the holders of common shares shall be distributed among the holders of the common shares on a pro rata basis.

Calls on Shares and Forfeiture of Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such
shareholders at least 14 clear days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid on the specified time are subject to forfeiture.

Redemption of Shares. Subject to the provisions of the Companies Law, we may issue shares on terms that are subject to
redemption, at our option or at the option of the holders, on such terms and in such manner, including out of capital, as may, before the issue of such shares, be determined by our board of directors.

Variations of Rights of Shares. All or any of the special rights attached to any class of shares may, subject to the
provisions of the Companies Law, be varied with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.

Inspection of Books and Records. Holders of our common shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate
records. However, we will provide our shareholders with annual audited financial statements. See Where You Can Find Additional Information.

Changes in Capital. We may from time to time by ordinary resolutions:



| |  |  | increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | sub-divide our existing shares, or any of them into shares of a smaller amount; and
| | - |  | -----------------------------------------------------------------------------------



| |  |  | cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount
of our share capital by the amount of the shares so cancelled.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Subject to the Companies Law and our
amended and restated memorandum and articles of association with respect to matters to be dealt with by ordinary resolution, we may, by special resolution, reduce our share capital and any capital redemption reserve in any manner authorized by law.

Issuance of Additional Shares. Our amended and restated memorandum and articles of association authorizes our
board of directors to issue additional common shares from time to time as our board of directors shall determine, to the extent there are available authorized but unissued shares.



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Our amended and restated memorandum and articles of association authorizes our board of
directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:



| |  |  | designation of the series;
| | - |  | --------------------------



| |  |  | the number of shares of the series;
| | - |  | -----------------------------------



| |  |  | the dividend rights, conversion rights and voting rights; and
| | - |  | -------------------------------------------------------------



| |  |  | the rights and terms of redemption and liquidation preferences.
| | - |  | ---------------------------------------------------------------

The issuance of preferred shares may be used as an anti-takeover device without further action on the part of the shareholders. Issuance
of these shares may dilute the voting power of holders of common shares.

Differences in Corporate Law

The Companies Law is modeled after that of England and Wales but does not follow recent statutory enactments in England. In addition, the
Companies Law differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Law applicable to us and the laws applicable to
companies incorporated in the State of Delaware.

Mergers and Similar Arrangements. A merger of two or more
constituent companies under Cayman Islands law requires a plan of merger or consolidation to be approved by the directors of each constituent company and authorization by (a) a special resolution and (b) such other authorization, if any,
as may be specified in its articles of association.

A merger between a Cayman parent company and its Cayman subsidiary or
subsidiaries does not require authorization by a resolution of shareholders. For this purpose a subsidiary is a company of which at least ninety percent (90%) of the issued shares entitled to vote are owned by the parent company.

The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is
waived by a court in the Cayman Islands.

Except in certain circumstances, a shareholder of a Cayman constituent company is
entitled to payment of the fair value of his shares upon dissenting to a merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other rights save for the right to seek relief on the grounds that the merger or
consolidation is void or unlawful.

In addition, there are statutory provisions that facilitate the reconstruction and
amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors representing 75% in value of each such class of shareholders or creditors, as the case may be, that are present
and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder
has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:



| |  |  | the statutory provisions as to the required majority vote have been met;
| | - |  | ------------------------------------------------------------------------



| |  |  | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the
minority to promote interests adverse to those of the class;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law.
| | - |  | ------------------------------------------------------------------------------------------------------------------



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When a take-over offer is made and accepted by holders of 90.0% of the shares within four
months, the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of
the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting
shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

Shareholders Suits. In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on
English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle, including when:



| |  |  | a company acts or proposes to act illegally or ultra vires;
| | - |  | -----------------------------------------------------------



| |  |  | the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been
obtained; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | those who control the company are perpetrating a fraud on the minority.
| | - |  | -------------------------------------------------------------------------

Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the
extent to which a companys memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such
as to provide indemnification against civil fraud or the consequences of committing a crime.

Our amended and restated
memorandum and articles of association permit indemnification of officers and directors for losses, damages costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty or fraud which may attach to such
directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into indemnification agreements with our directors and senior
executive officers that will provide such persons with additional indemnification beyond that provided in our amended and restated memorandum and articles of association.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed
that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Directors Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two
components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform
himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of
the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any
interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the
action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must
prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

As a matter
of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company  a duty to act bona fide in the best
interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his or her personal
interest or his or her duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a
greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these
authorities are likely to be followed in the Cayman Islands.



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##### Table of Contents

Shareholder Action by Written Consent. Under the Delaware General Corporation
Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Similarly, our amended and restated articles of association provide that any action required or permitted to be
taken at any annual or extraordinary general meetings of the company may be taken only upon the vote of the members at an annual or extraordinary general meeting duly noticed and convened in accordance with our amended and restated articles of
association and the law and may not be taken by a written resolution of members without a meeting.

Shareholder
Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting
may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

Our amended and restated articles of association allow any shareholder holding 25% or more of our paid up capital carrying the right of voting at general meetings to requisition a shareholders
meeting. As an exempted Cayman Islands company, we are not obliged by law to call shareholders annual general meetings. However, our amended and restated articles of association require us to call such meetings.

Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not
permitted unless the corporations certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority
shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholders voting power with respect to electing such director. As permitted under Cayman Islands law, our amended and restated
articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may
be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our amended and restated articles of association, directors may be removed by
ordinary resolution at any time before the expiration of their period of office.

Transactions with Interested
Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its
certificate of incorporation, it is prohibited from engaging in certain business combinations with an interested shareholder for three years following the date that such person becomes an interested shareholder. An interested shareholder
generally is a person or a group who or which owns or owned 15% or more of the targets outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the
target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business
combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the targets board of
directors.

Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections
afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, such transactions must be entered into bona fide in the best interests of
the company for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.

Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal
to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporations
outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under Cayman Islands law, a company may be wound
up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up
in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

Under the Companies Law of the Cayman Islands and our amended and restated articles of association, our company may be dissolved,
liquidated or wound up by a special resolution.



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Variation of Rights of Shares. Under the Delaware General Corporation Law, a
corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our amended and restated articles
of association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class only with a special resolution passed at a general meeting of the holders of the shares of that class.

Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporations governing documents may
be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, our amended and restated memorandum and articles of association
may only be amended by special resolution.

Inspection of Books and Records. Under the Delaware General
Corporation Law, any shareholder of a corporation may for any proper purpose inspect or make copies of the corporations stock ledger, list of shareholders and other books and records.

Holders of our shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our
corporate records. However, we intend to provide our shareholders with annual reports containing audited financial statements.

Anti-takeover Provisions in Our Memorandum and Articles of Association. Some provisions of our amended and restated
memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including a provision that authorizes our board of directors to issue preference
shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders.

Such shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of
management more difficult. If our board of directors decides to issue these preference shares, the price of our ADSs may fall and the voting and other rights of the holders of our common shares and ADSs may be materially adversely affected.

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our amended
and restated memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of our company.

Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our amended and restated memorandum and articles of association on the rights of non-resident or foreign
shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be
disclosed.



|C. | Material Contracts
|-- | ------------------

We
have not entered into any material contracts other than in the ordinary course of business and other than those described in Item 4. Information on the Company or elsewhere in this annual report on Form 20-F.



|D. | Exchange Controls
|-- | -----------------

See
Item 4. Information on the Company  B. Business Overview  Regulations  Dividend Distribution and  Foreign Currency Exchange.



|E. | Taxation
|-- | --------

The following
summary of the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ADSs or common shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which
are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ADSs or common shares, such as the tax consequences under state, local and other tax laws not addressed herein.



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Cayman Islands Taxation

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty or
withholding tax applicable to us or to any holder of our ADSs and common shares. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments
executed in, or after execution brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies, except those which hold interests in land in the Cayman
Islands. The Cayman Islands is not party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands.

Pursuant to Section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, we have obtained an undertaking from the Governor-in-Council:

(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall
apply to us or our operations; and

(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax
shall not be payable on or in respect of our shares, debentures or other obligations or by way of the withholding in whole or in part of any relevant payment as defined in Section 6

(3) of the Tax Concessions Law (1999 Revision) of the Cayman Islands.

The undertaking for us is for a period of twenty years from August 10, 2010.

Peoples Republic of China Taxation

If the PRC tax authorities determine that our Cayman Islands holding company is a resident enterprise for EIT purposes, a withholding tax of 10% for our non-PRC enterprise shareholders or
potentially 20% for non-PRC individual shareholders may be imposed on dividends they receive from us and on gains they recognize from transferring our shares or ADSs. See Item 3. Key Information  D. Risk Factors  Risks Related to
Doing Business in China  We may be classified as a resident enterprise for PRC EIT purposes, which could result in our global income becoming subject to the 25% PRC EIT rate.

United States Federal Income Taxation

The following discussion describes certain U.S. federal income tax consequences to U.S. Holders (as defined below) under present law of an investment in our ADSs or common shares. This discussion applies
only to U.S. Holders that hold the ADSs or common shares as capital assets (generally, property held for investment) and that have the U.S. dollar as their functional currency. This discussion is based on the tax laws of the United States as of the
date of this annual report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this annual report, as well as judicial and administrative interpretations thereof available on or before such date. All of the
foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.

The following discussion neither deals with the tax consequences to any particular investor nor describes all of the tax consequences applicable to persons in special tax situations such as:



| |  |  | banks;
| | - |  | ------



| |  |  | certain financial institutions;
| | - |  | -------------------------------



| |  |  | insurance companies;
| | - |  | --------------------



| |  |  | regulated investment companies;
| | - |  | -------------------------------



| |  |  | real estate investment trusts;
| | - |  | ------------------------------



| |  |  | broker-dealers;
| | - |  | ---------------



| |  |  | traders that elect to mark to market;
| | - |  | -------------------------------------



| |  |  | U.S. expatriates;
| | - |  | -----------------



| |  |  | tax-exempt entities;
| | - |  | --------------------



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| |  |  | persons liable for alternative minimum tax;
| | - |  | -------------------------------------------



| |  |  | persons holding ADSs or common shares as part of a straddle, hedging, conversion or integrated transaction;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | persons that actually or constructively own 10% or more of the total combined voting power of all classes of our voting stock;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | persons who acquired ADSs or common shares pursuant to the exercise of any employee share option or otherwise as compensation; or
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | partnerships or pass-through entities, or persons holding ADSs or common shares through such entities.
| | - |  | ------------------------------------------------------------------------------------------------------

INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR
CIRCUMSTANCES AS WELL AS THE STATE, LOCAL, NON-U.S. AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ADSs OR COMMON SHARES.

The discussion below of the U.S. federal income tax consequences to U.S. Holders will apply to you if you are the beneficial owner of our ADSs or common shares and you are, for U.S. federal
income tax purposes,



| |  |  | an individual who is a citizen or resident of the United States;
| | - |  | ----------------------------------------------------------------



| |  |  | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the
laws of the United States, any State thereof or the District of Columbia;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all
substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If you are a partner in a partnership or other entity taxable as a partnership that holds common shares, your tax treatment will depend on your status and the activities of the partnership. If you are a
partner in such a partnership, you should consult your tax advisor.

The discussion below assumes that the representations
contained in the deposit agreement are true and the obligations in the deposit agreement and any related agreement have been and will be complied with in accordance with their terms. If you own ADSs, you should be treated as the owner of the
underlying common shares represented by those ADSs for U.S. federal income tax purposes.

The U.S. Treasury has expressed
concerns that intermediaries in the chain of ownership between the holder of an ADS and the issuer of the security underlying the ADS may be taking actions that are inconsistent with the beneficial ownership of the underlying security (for example,
pre-releasing ADSs to persons that do not have the beneficial ownership of the securities underlying the ADSs). Accordingly, the creditability of any PRC taxes and the availability of the reduced tax rate for any dividends received by certain
non-corporate U.S. Holders, including individual U.S. Holders (as discussed below), could be affected by actions taken by intermediaries in the chain of ownership between the holders of ADSs and our company if as a result of such actions the holders
of ADSs are not properly treated as beneficial owners of underlying common shares.

Passive Foreign Investment Company

Based on the market price of our ADSs, the value of our assets and the composition of our income and assets, we
believe we were a PFIC for U.S. federal income tax purposes for our taxable year ended March 31, 2014. A non-U.S. corporation will be a PFIC for U.S. federal income tax purposes for any taxable year if either:



| |  |  | at least 75% of its gross income for such year is passive income; or
| | - |  | --------------------------------------------------------------------



| |  |  | at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that
produce passive income or are held for the production of passive income.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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For this purpose, we will be treated as owning our proportionate share of the assets and
earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock. In applying this rule, while it is not clear, we believe the contractual arrangements between us
and our affiliated entities should be treated as ownership of stock.

A separate determination must be made after the close
of each taxable year as to whether we were a PFIC for that year. Because the value of our assets for purposes of the asset test will generally be determined by reference to the market price of our ADSs or equity shares, our PFIC status will depend
in large part on the market price of the ADSs or common shares, which may fluctuate significantly.

If we are a PFIC for any
taxable year during which you hold ADSs or common shares, we generally will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold ADSs or common shares, unless we cease to be a PFIC and you make a
deemed sale election with respect to the ADSs or common shares. If such election is made, you will be deemed to have sold ADSs or common shares you hold at their fair market value on the last day of the last taxable year in which we
qualified as a PFIC and any gain from such deemed sale would be subject to the consequences described in the following two paragraphs. After the deemed sale election, your ADSs or common shares with respect to which the deemed sale election was made
will not be treated as shares in a PFIC unless we subsequently become a PFIC.

For each taxable year that we are treated as a
PFIC with respect to you, you will be subject to special tax rules with respect to any excess distribution you receive and any gain you recognize from a sale or other disposition (including a pledge) of the ADSs or common shares, unless
you make a mark-to-market election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or
your holding period for the ADSs or common shares will be treated as an excess distribution. Under these special tax rules:



| |  |  | the excess distribution or recognized gain will be allocated ratably over your holding period for the ADSs or common shares;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to the current taxable year, and any taxable years in your holding period prior to the first taxable year in which we were a PFIC,
will be treated as ordinary income; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for
each such year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution cannot be offset by any net operating losses for such years, and gains (but not losses)
realized on the sale or other disposition of our ADSs or common shares cannot be treated as capital, even if you hold the ADSs or common shares as capital assets.

If we are treated as a PFIC with respect to you for any taxable year, to the extent any of our subsidiaries are also PFICs or we make direct or indirect equity investments in other entities that are
PFICs, you may be deemed to own shares in such lower-tier PFICs that are directly or indirectly owned by us in that proportion which the value of the ADSs or common shares you own bears to the value of all of our ADSs or common shares, and you may
be subject to the adverse tax consequences described in the preceding two paragraphs with respect to the shares of such lower-tier PFICs that you would be deemed to own. You should consult your tax advisors regarding the application of the PFIC
rules to any of our subsidiaries.

A U.S. Holder of marketable stock (as defined below) in a PFIC may make a
mark-to-market election for such stock to elect out of the PFIC rules described above regarding excess distributions and recognized gains. If you make a mark-to-market election for our ADSs or common shares, you will include in income for each year
we are a PFIC an amount equal to the excess, if any, of the fair market value of the ADSs or common shares as of the close of your taxable year over your adjusted basis in such ADSs or common shares. You will be allowed an ordinary deduction for the
excess, if any, of the adjusted basis of the ADSs or common shares over their fair market value as of the close of the taxable year. However, deductions will be allowable only to the extent of any net mark-to-market gains on the ADSs or common
shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ADSs or common shares, will be treated as ordinary income.
Ordinary loss treatment will also apply to the deductible portion of any mark-to-market loss on the ADSs or common shares, as well as to any loss realized on the actual sale or other disposition of the ADSs or common shares, to the extent that the
amount of such loss does not exceed the net mark-to-market gains previously included for such ADSs or common shares. Your basis in the ADSs or common shares will be adjusted to reflect any such income or loss amounts. If you make a mark-to-market
election, any distributions we make would generally be subject to the rules discussed above under  Taxation of Dividends and Other Distributions on the ADSs or Common Shares, except that the lower tax rate applicable to qualified
dividend income would not apply.



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The mark-to-market election is available only for marketable stock, which is
stock that is regularly traded on a qualified exchange or other market, as defined in applicable U.S. Treasury regulations. Our ADS are listed on NASDAQ which is a qualified exchange or other market for these purposes. Consequently, if the ADSs
continue to be listed on NASDAQ and are regularly traded, and you are a holder of ADSs, we expect the mark-to-market election would be available to you if we were to become a PFIC. Because a mark-to-market election cannot be made for equity
interests in any lower-tier PFICs that we own, a U.S. Holder may continue to be subject to the PFIC rules with respect to its indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income
tax purposes. You should consult your tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.

Alternatively, if a non-U.S. corporation is a PFIC, a holder of shares in that corporation may avoid taxation under the PFIC rules
described above regarding excess distributions and recognized gains by making a qualified electing fund election to include in income its share of the corporations income on a current basis. However, you may make a qualified
electing fund election with respect to your ADSs or common shares only if we agree to furnish you annually with certain tax information, and we currently do not intend to prepare or provide such information.

Subject to certain exceptions based on the value of PFIC stock held, each U.S. Holder of a PFIC is required to file an annual report
containing such information as the U.S. Treasury may require. If we are or become a PFIC, you should consult your tax advisor regarding any reporting requirements that may apply to you.

You are strongly urged to consult your tax advisor regarding the application of the PFIC rules to your investment in ADSs or common
shares.

Taxation of Dividends and Other Distributions on the ADSs or Common Shares

Subject to the PFIC rules discussed above, the gross amount of any distributions we make to you with respect to our ADSs or common shares
generally will be includible in your gross income as dividend income on the date of receipt by the depositary, in the case of ADSs, or on the date of receipt by you, in the case of common shares, but only to the extent the distribution is paid out
of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Any such dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from
other U.S. corporations. To the extent the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), such excess amount will be treated first as a tax-free return of
your tax basis in your ADSs or common shares, and then, to the extent such excess amount exceeds your tax basis in your ADSs or common shares, as capital gain. We currently do not, and we do not intend to, calculate our earnings and profits under
U.S. federal income tax principles. Therefore, a U.S. Holder should expect any distribution will generally be reported as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the
rules described above.

With respect to certain non-corporate U.S. Holders, including individual U.S. Holders, any dividends
may be taxed at the lower capital gains rate applicable to qualified dividend income, provided (1) either (a) the ADSs or common shares, as applicable, are readily tradable on an established securities market in the United
States or (b) we are eligible for the benefits of a qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are neither a PFIC nor treated as such with respect to you (as discussed
above) for the taxable year in which the dividend was paid and the preceding taxable year and (3) certain holding period requirements are met. Under U.S. Internal Revenue Service authority, ADSs are considered for purposes of clause
(1) above to be readily tradable on an established securities market in the United States if they are listed on NASDAQ as are our ADSs. However, based on existing guidance, it is not entirely clear whether dividends you receive with respect to
the common shares will be taxed as qualified dividend income, because the common shares are not themselves listed on a U.S. exchange. As discussed above in  Passive Foreign Investment Company, we believe we were a PFIC for the
taxable year ended March 31, 2014. If we are treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, we may be eligible for the benefits of the income tax treaty between the United States and
the PRC. You should consult your tax advisors regarding the availability of the lower capital gains rate applicable to qualified dividend income for any dividends paid with respect to our ADSs or common shares.

Any dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified
dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will in general be limited to the gross amount of the dividend, multiplied by the reduced tax rate
applicable to qualified dividend income and divided by the highest tax rate normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose,
dividends distributed by us with respect to our ADSs or common shares will generally constitute passive category income but could, in the case of certain U.S. Holders, constitute general category income.



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If PRC withholding taxes apply to any dividends paid to you with respect to our ADSs or
common shares, the amount of the dividend would include the withheld PRC taxes and, subject to certain conditions and limitations, such PRC withholding taxes generally will be treated as foreign taxes eligible for credit against your U.S. federal
income tax liability. The rules relating to the determination of the foreign tax credit are complex and you should consult your tax advisors regarding the availability of a foreign tax credit in your particular circumstances, including the effects
of any applicable income tax treaties.

Taxation of Disposition of ADSs or Common Shares

Subject to the PFIC rules discussed above, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of
ADSs or common shares equal to the difference between the amount realized for the ADSs or common shares and your tax basis in the ADSs or common shares. The gain or loss generally will be capital gain or loss. If you are a non-corporate U.S. Holder,
including an individual U.S. Holder, that has held the ADSs or common shares for more than one year, you may be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. As discussed above in  Passive
Foreign Investment Company, we believe we were a PFIC for the taxable year ended March 31, 2014. Any gain or loss you recognize on a disposition of ADSs or common shares will generally be treated as U.S. source income or loss for foreign
tax credit limitation purposes. However, if we are treated as a resident enterprise for PRC tax purposes, we may be eligible for the benefits of the income tax treaty between the United States and the PRC. In such event, if PRC tax were
to be imposed on any gain from the disposition of the ADSs or common shares, a U.S. Holder that is eligible for the benefits of the income tax treaty between the United States and the PRC may elect to treat the gain as PRC source income for foreign
tax credit purposes. You should consult your tax advisors regarding the proper treatment of gain or loss in your particular circumstances, including the effects of any applicable income tax treaties.

Information Reporting and Backup Withholding

Any dividend payments with respect to ADSs or common shares and proceeds from the sale, exchange or redemption of ADSs or common shares may be subject to information reporting to the U.S. Internal Revenue
Service and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder that furnishes a correct taxpayer identification number and makes any other required certification or that is otherwise exempt from backup
withholding. U.S. Holders that are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S.
information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup
withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue
Service and furnishing any required information in a timely manner.

Additional Reporting Requirements

Certain U.S. Holders who are individuals are required to report information relating to an interest in our ADSs or common shares, subject
to certain exceptions (including an exception for ADSs or common shares held in accounts maintained by certain financial institutions). U.S. Holders should consult their tax advisors regarding the effect, if any, of these rules on their ownership
and disposition of the ADSs and common shares.



|F. | Dividends and Paying Agents
|-- | ---------------------------

Not Applicable.



|G. | Statement by Experts
|-- | --------------------

Not Applicable.



|H. | Documents on Display
|-- | --------------------

We previously filed with the SEC our registration statement on Form F-1, as amended, and related prospectus under the Securities Act
of 1933, with respect to our common shares represented by the ADSs. We also filed with the SEC a related registration statement on Form F-6 with respect to the ADSs.



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We are subject to periodic reporting and other informational requirements of the Exchange
Act as applicable to foreign private issuers. Accordingly, we are required to file reports, including annual reports on Form 20-F, and other information with the SEC. All documents filed by us with the SEC can be inspected and copied at the public
reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The SEC also maintains a web site at www.sec.govthat contains reports, proxy and information statements, and other information regarding registrants that make electronic filings
with the SEC using its EDGAR system.

As a foreign private issuer, we are exempt from the rules of the Exchange Act
prescribing the furnishing and content of quarterly reports and proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16
of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

We intend to furnish Citibank, N.A., the depositary of our ADSs, with all notices of shareholders meeting and other
reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon our written request, will mail to all record holders of ADSs
the information contained in any notice of a shareholders meeting received by the depositary from us.

In accordance
with Rule 5250(d) of the NASDAQ Listing Rules, we will post this annual report on Form 20-F on our website at http://ir.sky-mobi.com/sec.cfm. In addition, we will provide hard copies of our annual report free of charge to shareholders and ADS
holders upon request.



|I. | Subsidiary Information
|-- | ----------------------

For a listing of our subsidiaries, see Item 4. Information on the Company  B. Organizational Structure, as well as
Exhibit 8.1 filed herewith.



|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Foreign Exchange Risk

Our revenues and purchases are generally
denominated in Renminbi. Our assets and liabilities are also denominated in Renminbi, except for cash held in other currencies, which amounted to RMB88.3 million (US$14.2 million) as of March 31, March 31, 2014. As a result, fluctuations
in the exchange rates between the U.S. dollar and Renminbi will affect our results of operations and financial condition. The Renminbis exchange rate with the U.S. dollar is affected by, among other things, changes in Chinas political
and economic conditions and Chinas foreign exchange policies. The Peoples Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals.

On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the RMB
appreciated more than 20% against the U.S. dollar over the following five years. In June 2010, the PRC government announced that it would increase Renminbi exchange rate flexibility and since that time the Renminbi has gradually appreciated against
the U.S. dollar. However, it remains unclear how this flexibility might be implemented. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in greater fluctuation of the
Renminbi against the U.S. dollar.

To the extent that we need to convert U.S. dollars into RMB for our operations or other
uses within the PRC, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. On the other hand, a decline in the value of RMB against the U.S. dollar could reduce the U.S.
dollar equivalent amounts of our financial results, the value of your investment in our company and the dividends we may pay in the future, if any, all of which may have a material adverse effect on the price of our ADSs. As of March 31, 2014,
we had RMB-denominated cash balances of RMB286.5 million. Assuming we had converted the RMB286.5 million into U.S. dollars at the exchange rate of $1.00 for RMB6.2164 as of March 31, 2014, this cash balance would have been US$46.1 million.
Assuming a 5% depreciation of the RMB against the U.S. dollar, this cash balance would have decreased to US$43.9 million as of March 31, 2014 resulting in US$2.2 million of foreign exchange loss.



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Interest Rate Risk

We do not have any outstanding long-term or short-term loans. Our exposure to interest rate risk primarily relates to interest income generated by excess cash invested in bank deposits with original
maturities of three months or less and time deposits with maturity terms of three months or more but less than one year. If we borrow money in future periods, we may be exposed to interest rate risk related to interest expenses incurred by any
short-term or long-term bank borrowings. We have not used any derivative financial instruments to manage our interest risk exposure. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates.
However, our future interest income may be lower than expected due to changes in market interest rates.

Inflation Risk

In recent years, inflation has not had a material impact on our results of operations. According to the National Bureau of Statistics of
China, the change in Chinas Consumer Price Index was -5.4%, 2.6% and 2.6% in calendar year 2011, 2012 and 2013, respectively. If inflation rises, it may materially adversely affect our business.

Credit Risk

Our
maximum exposure to credit risks is equivalent to the total carrying amount of loan receivables, trade and other receivables, amounts due from related parties, cash and cash equivalents, term deposits, investments at FVTPL and available-for-sale
investments in the aggregate amount of RMB673.9 million, RMB693.0 million and RMB688.0 million (US$110.7 million) as of March 31, 2012, 2013 and 2014, respectively.

Collection of our revenues is substantially done through mobile service providers with whom we have co-operative service agreements. The total carrying amount of trade receivables from mobile service
providers was RMB81.7 million, RMB36.9 million and RMB22.3 million (US$3.6 million), respectively as of March 31, 2012, 2013 and 2014. We also had RMB38.7 million trade receivables from one mobile service operator as of March 31, 2014. In
order to minimize credit risk, we assess the credit worthiness of the mobile service providers prior to contracting with them.

In addition, we allocate revenue payments among mobile service providers based on their payment history and our assessment of their
relationship with mobile network operators, which will impact the mobile service providers ability to pay. We monitor the subsequent performance of the mobile service providers in order to mitigate collection risk going forward. In addition,
we review the recoverable amount of each individual trade receivable at the end of each reporting period to determine if a provision should be made for uncollectible amounts.

We have concentration of credit risk with exposure limited to certain mobile service providers and one mobile network operator. As of March 31, 2012, 2013 and 2014, our ten mobile service providers
and the mobile network operator accounted for approximately RMB64.8 million, RMB51.9 million and RMB47.4 million (US$7.6 million), or 73%, 80% and 78%, of our trade receivables, respectively. We closely monitor the subsequent settlement of trade
receivables and do not grant long credit periods to the counterparties.

As of March 31, 2012, 2013 and 2014, all of our
cash and cash equivalents and time deposits were held by reputable financial institutions. We believe that we are not exposed to unusual risks as these financial institutions have high credit quality. We have not experienced any losses on deposits
of cash and cash equivalents and short-term investments. Prior to entering into contracts, we make a credit assessment of our counterparties to assess the collectability of the contracts.



|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- | ------------------------------------------------------



|A. | Debt Securities
|-- | ---------------

Not
applicable.



|B. | Warrants and Rights
|-- | -------------------

Not applicable.



|C. | Other Securities
|-- | ----------------

Not
applicable.



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|D. | American Depositary Shares
|-- | --------------------------

Fees and
Charges Our ADS holders May Have to Pay

ADS holders will be required to pay the following service fees to the depository:



|        |  |                                                                                                   |  |                                                                                          
|------- |  | ------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------
|Service |  | Fee                                                                                              
|       |  | Issuance of ADSs                                                                                  |  | Up to US$0.05 per ADS issued                                                             
|        |  |                                                                                                  
|       |  | Cancellation of ADSs                                                                              |  | Up to US$0.05 per ADS canceled                                                           
|        |  |                                                                                                  
|       |  | Distribution of cash dividends or other cash distributions                                        |  | Up to US$0.05 per ADS held                                                               
|       |  | Distribution of ADSs pursuant to stock dividends, free stock distributions or exercise of rights. |  | Up to US$0.05 per ADS held                                                               
|       |  | Distribution of securities other than ADSs or rights to purchase additional ADSs                  |  | Up to US$0.05 per ADS held                                                               
|       |  | Depositary services                                                                               |  | Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary
|        |  |                                                                                                  
|       |  | Transfer of ADSs                                                                                  |  | US$1.50 per certificate presented for transfer                                           

ADS holders will also be responsible to pay certain fees and expenses incurred by the depositary and
certain taxes and governmental charges such as:



| |  |  | fees for the transfer and registration of common shares charged by the registrar and transfer agent for the common shares in the Cayman Islands (i.e.,
upon deposit and withdrawal of common shares);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | expenses incurred for converting foreign currency into U.S. dollars;
| | - |  | --------------------------------------------------------------------



| |  |  | expenses for cable, telex and fax transmissions and for delivery of securities;
| | - |  | -------------------------------------------------------------------------------



| |  |  | taxes and duties upon the transfer of securities (i.e., when common shares are deposited or withdrawn from deposit); and
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | fees and expenses incurred in connection with the delivery or servicing of common shares on deposit.
| | - |  | ----------------------------------------------------------------------------------------------------

Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary by the brokers (on behalf of
their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to the depositary for cancellation. The brokers in turn charge these fees to their clients. Depositary fees
payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date.

The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions
other than cash (such as stock dividends and rights distributions), the depositary charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether
certificated or uncertificated in direct registration), the depositary sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary generally collects its fees
through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients ADSs in DTC accounts in
turn charge their clients accounts the amount of the fees paid to the depositary.



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In the event of refusal to pay the depositary fees, the depositary may, under the terms of
the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.

The fees and charges that ADS holders may be required to pay may vary over time and may be changed by us and by the depositary.

The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program established pursuant to
the deposit agreement, by making available a portion of the depositary fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary may agree from time to time. As described in the deposit
agreement, we or the depositary may withhold or deduct from any distributions made in respect of common shares and may sell for the account of a holder any or all of the common shares and apply such distributions and sale proceeds in payment of any
taxes (including applicable interest and penalties) or charges that are or may be payable by holders in respect of the ADSs.

Fees and
Other Payments Made by the Depositary to Us

The depositary has agreed to reimburse us for certain expenses we incur that
are related to establishment and maintenance of the ADS program, including investor relations expenses and exchange application and listing fees. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount
of reimbursement available to us is not related to the amounts of fees the depositary collects from investors. The depositary has reimbursed us for an expenses related to the establishment and maintenance of the ADS program in an amount of US$0.4
million, after deduction of applicable U.S. taxes, as of March 31, 2014.



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PART II



|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- | -----------------------------------------------

Not Applicable.



|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- | ----------------------------------------------------------------------------

A.  D. Material Modifications to the Rights of Security Holders

None.



|E. | Use of Proceeds
|-- | ---------------

Not
Applicable.



|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of
Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief
financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as required by
Rule 13a-15(b) under the Exchange Act.

Based upon that evaluation, our chief executive officer and chief financial
officer have concluded that, as of March 31, 2014, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act was
recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated
and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

Managements Annual Report on Internal Control over Financial Reporting and Attestation Report of the Independent Registered Public Accounting Firm

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule
13a-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness of our internal control over
financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(c) of the
Exchange Act, based on criteria established in the framework in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management concluded that our internal control over financial reporting was effective as of March 31,
2014 based on the criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Our independent registered public accounting firm, Deloitte Touche Tohmatsu Certified Public Accountants LLP, has audited the effectiveness of our internal control over financial reporting as of
March 31, 2014, as stated in its report, which appears on page F-3 of this annual report on Form 20-F.

Changes in Internal Control
over Financial Reporting

During the audit of our financial statements for the fiscal year ended March 31, 2011, we
identified one material weakness and one significant deficiency in our internal control over financial reporting. The material weakness was related to design deficiencies with respect to our internal control over computer systems that could affect
the integrity of transaction data and financial information. The significant deficiency identified was related to lack of established and documented financial accounting policies and procedures.



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In order to remediate the material weakness related to design deficiencies with respect to
our internal control over computer systems that could affect the integrity of transaction data and financial information, we hired two new internal IT control managers in May 2010 and June 2011 to upgrade our computer systems and monitor the
performance of our system. We believe that the key aspect of the design deficiencies identified with respect to our internal control over computer systems that could affect the integrity of transaction data and financial information had been fully
addressed as of March 31, 2012.

In order to remediate the significant deficiency related to lack of established and
documented financial accounting policies and procedures, we engaged an independent internal control advisor and hired a new internal control manager, who has extensive working experience in internal control, in May 2011 to develop the appropriate
financial accounting policies and procedures and monitor the operating effectiveness of these updated policies. We believe that this significant deficiency had been remediated as of March 31, 2012.

There were no changes in our internal control over financial reporting during fiscal year 2014 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.



|ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT
|--------- | --------------------------------

Mr. Wei Zhou qualifies as an audit committee financial expert as defined in Item 16A of Form 20-F. Mr. Zhou satisfies the independence requirements of Rule 5605 of NASDAQ Stock
Market, Marketplace Rules and Rule 10A-3 under the Exchange Act.



|ITEM 16B. | CODE OF ETHICS
|--------- | --------------

Our
board of directors adopted a code of business conduct and ethics that applies to our directors, officers and employees. We have filed our code of business conduct and ethics as an exhibit to Exhibit 99.1 of our registration statement on Form F-1
(file No. 333-170707) filed with the Securities and Exchange Commission on November 26, 2010 and posted a copy of our code of business conduct and ethics on our investor relations website at http://ir.sky-mobi.com/governance.cfm. We hereby
undertake to provide to any person without charge, upon a written request, a copy of our code of business conduct and ethics.



|ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|--------- | --------------------------------------

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Deloitte Touche Tohmatsu Certified Public Accountant LLP, our
principal external auditors, for the periods indicated.



|                      |  |                |       |  |      |  |       |     |  |  |     | 
|--------------------- |  | -------------- | ----- |  | ---- |  | ----- | --- |  |  | --- | 
|                      |  | 2013           |       |  | 2014 | 
|                      |  | RMB            |       |  | RMB  |  |       | US$ | 
|                      |  | (in thousands) |      
|Audit fees(1)         |  |                | 5,640 |  |      |  | 4,689 |     |  |  | 754 | 
|Audit-related fees(2) |  |                | 1,024 |  |      |  | 844   |     |  |  | 136 | 
|Tax fees(3)           |  |                | 174   |  |      |  | 297   |     |  |  | 48  | 



|(1) | Audit fees means the aggregate fees billed for professional services rendered in connection with the audit or review of our financial statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Audit-related fees represents aggregate fees billed for professional services rendered in connection with the assurance and related services.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Tax fees represents the aggregated fees billed for professional services rendered in connection with tax compliance, tax advice and tax planning.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

The policy of our audit committee is to pre-approve all audit and non-audit services provided by Deloitte
Touche Tohmatsu Certified Public Accountants LLP, including audit services, audit-related services, tax services and other services as described above, and the services provided by Ernst & Young related to the internal controls over
financial reporting for the fiscal year ended March 31, 2014, other than those for de minimus services which are approved by our audit committee prior to the completion of the audit. Prior to our initial public offering, all initial public
offering related accountant fees were approved by the Board.



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|ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|--------- | ----------------------------------------------------------

Not applicable.



|ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.
|--------- | -----------------------------------------------------------------------

Below is a table containing information about purchases made by us or by affiliated purchasers for the fiscal year ended March 31, 2014.



|                                       |  |                                            |           |  |                                          |   |       |                                                                                      |  |  |                                                                                                      |  |  |   |             | 
|-------------------------------------- |  | ------------------------------------------ | --------- |  | ---------------------------------------- | - | ----- | ------------------------------------------------------------------------------------ |  |  | ---------------------------------------------------------------------------------------------------- |  |  | - | ----------- | 
|Period                                 |  | (a) TotalNumber
ofCommonSharesPurchased(1) |           |  | (b) AveragePrice PaidPer 
CommonShare(2) |   |       | (c) Total Numberof CommonSharesPurchased asPart of PubliclyAnnouncedPlans orPrograms |  |  | (d) MaximumApproximateDollar Value ofCommon Sharesthat May Yet BePurchased Underthe Plans orPrograms | 
|April 1, 2013  April 30, 2013         |  |                                            | 2,508,600 |  |                                          | $ | 0.220 |                                                                                      |  |  | 2,508,600                                                                                            |  |  | $ | 5,462,343.2 | 
|May 1, 2013  May 31, 2013             |  |                                            | 843,408   |  |                                          | $ | 0.240 |                                                                                      |  |  | 843,408                                                                                              |  |  | $ | 5,252,158.7 | 
|June 1, 2013  June 30, 2013           |  |                                            | 3,292,160 |  |                                          | $ | 0.377 |                                                                                      |  |  | 3,292,160                                                                                            |  |  | $ | 4,012,115.1 | 
|July 1, 2013  July 30, 2013           |  |                                            | 868,192   |  |                                          | $ | 0.420 |                                                                                      |  |  | 868,192                                                                                              |  |  | $ | 3,647,412.4 | 
|August 1, 2013  August 31, 2013       |  |                                            | 581,984   |  |                                          | $ | 0.435 |                                                                                      |  |  | 581,984                                                                                              |  |  | $ | 3,394,005.8 | 
|September 1, 2013  September 30, 2013 |  |                                            | 710,672   |  |                                          | $ | 0.436 |                                                                                      |  |  | 710,672                                                                                              |  |  | $ | 3,084,371.6 | 
|November 1, 2013  November 30, 2013   |  |                                            | 1,169,864 |  |                                          | $ | 0.418 |                                                                                      |  |  | 1,169,864                                                                                            |  |  | $ | 2,595,887.9 | 
|December 1, 2013  December 31, 2013   |  |                                            | 2,313,840 |  |                                          | $ | 0.433 |                                                                                      |  |  | 2,313,840                                                                                            |  |  | $ | 1,593,773.6 | 



|(1) | On August 13, 2012, we announced a share repurchase program to repurchase up to an aggregate of $10 million of Sky-mobis issued and outstanding ADSs
representing common shares from August 13, 2012 to August 11, 2014. The Companys share repurchase program complies with the conditions of Rule 10b-18 under the Exchange Act.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The average price paid per common share is calculated using the execution price for each repurchase excluding commissions paid to brokers.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 16F. | CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
|--------- | --------------------------------------------

Not Applicable.



|ITEM 16G. | CORPORATE GOVERNANCE
|--------- | --------------------

We
are incorporated in the Cayman Islands and our corporate governance practices are governed by applicable Cayman Islands law. In addition, because our ADSs are listed on NASDAQ, we are subject to the corporate governance requirements of NASDAQ.
However, NASDAQ Marketplace Rule 5615(a)(3) permits foreign private issuers like us to follow home country practice with respect to certain corporate governance matters, and we may decide to follow home country practice on a
case-by-case basis.

In particular, we have elected to follow home country practice with respect to the
composition of our audit committee. In the opinion of Conyers Dill & Pearman (Cayman) Limited, under Cayman Islands law, our audit committee may comprise two directors rather than three as required under NASDAQ Marketplace Rule 5605(c)(2).
We are committed to a high standard of corporate governance. Accordingly, we endeavor to comply with most NASDAQ corporate governance practices and believe that we are currently in compliance with the NASDAQ corporate governance practices applicable
to foreign private issuers.



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|ITEM 16H. | MINE SAFETY DISCLOSURE
|--------- | ----------------------

Not applicable.



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PART III



|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------

We
have elected to provide financial statements pursuant to Item 18.



|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

The consolidated financial statements for Sky-mobi Limited and its subsidiaries are included at the end of this annual report.



|ITEM 19. | EXHIBITS
|-------- | --------



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|              | 
|1.1           |  | Third Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 3.2 of our registration statement on Form F-1 (File No.
333-170707), as amended, initially filed with the Commission on November 19, 2010)                                                                                                                                                                                                                                                                                                               
|              | 
|2.1           |  | Registrants Specimen American Depositary Receipt (incorporated by reference to Exhibit 99.A of our registration statement on Form F-6 (File No. 333-170849) filed with the
Commission on November 26, 2010)                                                                                                                                                                                                                                                                                                                                                                       
|              | 
|2.2           |  | Registrants Specimen Certificate for Common Shares (incorporated by reference to Exhibit 4.2 of our registration statement on Form F-1 (File No. 333-170707), as amended,
initially filed with the Commission on November 19, 2010)                                                                                                                                                                                                                                                                                                                                               
|              | 
|2.3           |  | Form of Deposit Agreement among the Registrant, the depositary and holder of the American Depositary Receipts (incorporated by reference to Exhibit 99.A of our registration
statement on Form F-6 (File No. 333-170849) filed with the Commission on November 26, 2010)                                                                                                                                                                                                                                                                                                           
|              | 
|4.1           |  | Amendment No. 1 to Series A Preferred Share and Warrant Purchase Agreement and Amendment No. 2 to Shareholders Agreement, dated as of March 1, 2010, among Profit Star Limited,
Sequoia Capital China II, L.P., Sequoia Capital China Principals Fund II, L.P., Sequoia Capital China Partners Fund II, L.P., Xplane Ltd., shareholders of Xplane Ltd. and certain other parties listed thereunder (incorporated by reference to Exhibit
4.5 of our registration statement on Form F-1 (File No. 333-170707), as amended, initially filed with the Commission on November 19, 2010)
|              | 
|4.2           |  | Shareholders Agreement, dated as of August 2, 2007, among Profit Star Limited, Sequoia Capital China II, L.P., Xplane Ltd., shareholders of Xplane Ltd. and certain other parties
listed thereunder (incorporated by reference to Exhibit 4.6 of our registration statement on Form F-1 (File No. 333-170707), as amended, initially filed with the Commission on November 19, 2010)                                                                                                                                                                                               
|              | 
|4.3           |  | Amendment to Shareholders Agreement, dated as of September 5, 2008, among Profit Star Limited, Sequoia Capital China II, L.P., Sequoia Capital China Principals Fund II, L.P.,
Sequoia Capital China Partners Fund II, L.P., Xplane Ltd., shareholders of Xplane Ltd. and certain other parties listed thereunder (incorporated by reference to Exhibit 4.7 of our registration statement on Form F-1 (File No. 333-170707), as amended,
initially filed with the Commission on November 19, 2010)                                                                                 
|              | 
|4.4           |  | Amended and Restated Warrant to Purchase Series A Preferred Shares, dated as of June 29, 2009, among Profit Star Limited, Sequoia Capital China II, L.P., Sequoia Capital China
Principals Fund II, L.P., Sequoia Capital China Partners Fund II, L.P., Xplane Ltd., shareholders of Xplane Ltd. and certain other parties listed thereunder (incorporated by reference to Exhibit 4.9 of our registration statement on Form F-1 (File
No. 333-170707), as amended, initially filed with the Commission on November 19, 2010)                                                      
|              | 
|4.5           |  | 2010 Share Incentive Plan (incorporated by reference to Exhibit 10.1 of our registration statement on Form F-1 (File No. 333-170707), as amended, initially filed with the Commission
on November 19, 2010)                                                                                                                                                                                                                                                                                                                                                                        
|              | 
|4.6           |  | Form of Indemnification Agreement with the Registrants directors and/or officers (incorporated by reference to Exhibit 10.2 of our registration statement on Form F-1 (File No.
333-170707), as amended, initially filed with the Commission on November 19, 2010)                                                                                                                                                                                                                                                                                                                



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|      |  |                                                                                                                                                                                                                                                                                                        
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|4.7   |  | English translation of Form of Employment Agreement with the Registrants certain senior executives and its amendment (incorporated by reference to Exhibit 10.3 of our
registration statement on Form F-1 (File No. 333-170707), as amended, initially filed with the Commission on November 19, 2010)
|      | 
|4.8   |  | English translation of Form of Confidentiality Agreement with the Registrants certain senior executives (incorporated by reference to Exhibit 10.4 of our registration
statement on Form F-1 (File No. 333-170707), as amended, initially filed with the Commission on November 26, 2010)             
|      | 
|4.9   |  | English translation of Form of Employment Agreement with the Registrants certain senior executives and its amendment (incorporated by reference to Exhibit 10.5 of our
registration statement on Form F-1 (File No. 333-170707), as amended, initially filed with the Commission on November 19, 2010)
|      | 
|4.10* |  | English translation of Form of Technical Support Service Agreement between the Registrants PRC subsidiaries and each SPE                                                                                                                                                                              
|      | 
|4.11* |  | English translation of Form of Strategy Consulting Service Agreement between the Registrants PRC subsidiaries and each SPE                                                                                                                                                                            
|      | 
|4.12* |  | English translation of Form of Intellectual Property License Agreement between the Registrants PRC subsidiaries and each SPE                                                                                                                                                                          
|      | 
|4.13* |  | English translation of Purchase Option and Cooperation Agreement among the Registrants PRC subsidiaries, each SPE and the shareholders of each SPE                                                                                                                                                    
|      | 
|4.14* |  | English translation of Form of Power of Attorney issued by the shareholders of each SPE                                                                                                                                                                                                                
|      | 
|4.15* |  | English translation of Form of Equity Pledge Agreement among the Registrants PRC subsidiaries, each SPE and the shareholders of each SPE                                                                                                                                                              
|      | 
|4.16  |  | Form of Director Agreement with independent directors of the Registrant (incorporated by reference to Exhibit 10.33 of our registration statement on Form F-1 (File No.
333-170707), as amended, initially filed with the Commission on November 19, 2010)                                             
|      | 
|8.1*  |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                         
|      | 
|11.1  |  | Code of Business Conduct and Ethics of the Registrant (incorporated by reference to Exhibit 99.1 of our registration statement on Form F-1 (File No. 333-170707), as amended,
initially filed with the Commission on November 26, 2010)                                                                
|      | 
|12.1* |  | CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                            
|      | 
|12.2* |  | CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                            
|      | 
|13.1* |  | CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                            
|      | 
|13.2* |  | CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                            
|      | 
|15.1* |  | Consent of Han Kun Law Offices                                                                                                                                                                                                                                                                         
|      | 
|15.2* |  | Consent of Deloitte Touche Tohmatsu Certified Public Accountants LLP                                                                                                                                                                                                                                   
|      | 
|15.3* |  | Consent of Conyers Dill and Pearman (Cayman) Limited                                                                                                                                                                                                                                                   



|* | Filed with this annual report on Form 20-F.
|- | -------------------------------------------

| | Order for confidential treatment of portions of this document has been granted by the Commission pursuant to Rule 406 of the Securities Act.
|- | --------------------------------------------------------------------------------------------------------------------------------------------



107



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##### Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its
behalf.



SKY-MOBI LIMITEDBy:

/s/ Michael Tao SongName: Michael Tao SongTitle: Chairman and Chief Executive Officer


Date: July 30, 2014



108



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##### Table of Contents

SKY-MOBI LIMITED

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                            |  |         |     | 
|--------------------------------------------------------------------------------------------------------------------------- |  | ------- | --- | 
|                                                                                                                            |  | PAGE(S) |    
|                                                                                                                            | 
|Reports of Independent Registered Public Accounting Firm                                                                    |  |         | F-2 | 
|Consolidated Statements of Profit or Loss and Other Comprehensive Income for the Years Ended March 
31, 2012, 2013 and 2014 |  |         | F-4 | 
|Consolidated Statements of Financial Position as of March 31, 2012, 2013 and
2014                                           |  |         | F-5 | 
|Consolidated Statements of Changes in Equity for the Years Ended March 31, 2012, 2013 and
2014                              |  |         | F-6 | 
|Consolidated Statements of Cash Flows for the Years Ended March 31, 2012, 2013 and
2014                                     |  |         | F-7 | 
|Notes to the Consolidated Financial Statements                                                                              |  |         | F-8 | 



F-1



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Shareholders of

Sky-mobi Limited

We have
audited the accompanying consolidated statements of financial position of Sky-mobi Limited and subsidiaries (the Group) as of March 31, 2012, 2013 and 2014, and the related consolidated statements of profit or loss and other
comprehensive income, changes in equity, and cash flows for each of the three years in the period ended March 31, 2014. These financial statements are the responsibility of the Groups management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such
consolidated financial statements present fairly, in all material respects, the financial position of Sky-mobi Limited and subsidiaries as of March 31, 2012, 2013 and 2014, and the results of their operations and their cash flows for each of
the three years in the period ended March 31, 2014, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Groups
internal control over financial reporting as of March 31, 2014, based on the criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated July 30, 2014 expressed an unqualified opinion on the Groups internal control over financial reporting.

Our audits also comprehended the translation of Renminbi amounts into United States dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2.
Such United States dollar amounts are presented solely for the convenience of readers in the United States of America.

/s/ Deloitte Touche
Tohmatsu Certified Public Accountants LLP

Shanghai, China

July 30, 2014



F-2



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Shareholders of

Sky-mobi Limited

We have
audited the internal control over financial reporting of Sky-mobi Limited and subsidiaries (the Group) as of March 31, 2014, based on the criteria established in Internal Control  Integrated Framework (1992) issued
by the Committee of Sponsoring Organizations of the Treadway Commission. The Groups management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Groups internal control over financial reporting based on
our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons
performing similar functions, and effected by the companys board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or
fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our
opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of March 31, 2014, based on the criteria established in Internal Control  Integrated Framework (1992) issued by
the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards
of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended March 31, 2014 of the Group and our report dated July 30, 2014 expressed an unqualified opinion on those
financial statements and included an explanatory paragraph regarding the translation of Renmimbi amounts into United States dollar amounts for the convenience of readers in the United States of America.

/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP

Shanghai, China

July 30, 2014



F-3



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##### Table of Contents

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME



|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|------------------------------------------------------ |  | ----- |  | --------------------- | -------- | - | ------- |  | -------- | ------- |  |  | -------- | - |  |  | ------- | -
|                                                       |  |       |  | Years Ended March 31, |         
|                                                       |  | NOTES |  | 2012                  |          |   | 2013    |  |          | 2014    |  |  | 2014     |  
|                                                       |  |       |  | RMB000               |          |   | RMB000 |  |          | RMB000 |  |  | US$000  |  
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  | (Note 2) |  
|Revenues                                               |  | 6     |  |                       | 685,563  |   |         |  | 601,107  |         |  |  | 485,551  |   |  |  | 78,108  |  
|Cost of revenues from third parties                    |  |       |  |                       | (465,479 | ) |         |  | (412,246 | )       |  |  | (339,982 | ) |  |  | (54,691 | )
|Cost of revenues from related parties                  |  |       |  |                       | (5,546   | ) |         |  | (6,534   | )       |  |  | (24,453  | ) |  |  | (3,934  | )
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Gross profit                                           |  |       |  |                       | 214,538  |   |         |  | 182,327  |         |  |  | 121,116  |   |  |  | 19,483  |  
|Research and development expenses                      |  |       |  |                       | (71,088  | ) |         |  | (73,027  | )       |  |  | (38,644  | ) |  |  | (6,216  | )
|Sales and marketing expenses                           |  |       |  |                       | (37,361  | ) |         |  | (35,369  | )       |  |  | (36,351  | ) |  |  | (5,848  | )
|General and administration expenses                    |  |       |  |                       | (83,996  | ) |         |  | (69,491  | )       |  |  | (58,401  | ) |  |  | (9,395  | )
|Other operating income, net                            |  | 7     |  |                       | 3,675    |   |         |  | 2,320    |         |  |  | 5,772    |   |  |  | 929     |  
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Profit (loss) from operations                          |  |       |  |                       | 25,768   |   |         |  | 6,760    |         |  |  | (6,508   | ) |  |  | (1,047  | )
|Other gains and losses                                 |  | 8     |  |                       | 11,649   |   |         |  | 15,531   |         |  |  | 17,482   |   |  |  | 2,812   |  
|Impairment of investment in associates                 |  | 19    |  |                       |         |   |         |  | (1,367   | )       |  |  | (727     | ) |  |  | (117    | )
|Impairment of an available-for-sale investment         |  |       |  |                       |         |   |         |  |         |         |  |  | (800     | ) |  |  | (129    | )
|Share of results of associates                         |  | 19    |  |                       | (886     | ) |         |  | (935     | )       |  |  | 2,428    |   |  |  | 391     |  
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Profit before tax                                      |  | 9     |  |                       | 36,531   |   |         |  | 19,989   |         |  |  | 11,875   |   |  |  | 1,910   |  
|Income tax expense                                     |  | 10    |  |                       | (3,602   | ) |         |  | (2,733   | )       |  |  | (7,218   | ) |  |  | (1,161  | )
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Profit for the year                                    |  |       |  |                       | 32,929   |   |         |  | 17,256   |         |  |  | 4,657    |   |  |  | 749     |  
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Total comprehensive income for the year                |  |       |  |                       | 32,929   |   |         |  | 17,256   |         |  |  | 4,657    |   |  |  | 749     |  
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Profit and total comprehensive income attributable to: |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Owners of the Company                                  |  |       |  |                       | 32,969   |   |         |  | 17,112   |         |  |  | 5,251    |   |  |  | 845     |  
|Non-controlling interests                              |  |       |  |                       | (40      | ) |         |  | 144      |         |  |  | (594     | ) |  |  | (96     | )
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|                                                       |  |       |  |                       | 32,929   |   |         |  | 17,256   |         |  |  | 4,657    |   |  |  | 749     |  
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|                                                       |  |       |  |                       |         
|Earnings per share:                                    |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Basic                                                  |  | 11    |  |                       | 0.13     |   |         |  | 0.07     |         |  |  | 0.02     |   |  |  | 0.00    |  
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Diluted                                                |  | 11    |  |                       | 0.13     |   |         |  | 0.07     |         |  |  | 0.02     |   |  |  | 0.00    |  
|                                                       |  |       |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  



F-4



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##### Table of Contents

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | ------------ | -------- | - | ------- |  | -------- | ------- |  |  | -------- | - |  |  | ------- | -
|                                                                                                                                                                                              |  |       |  | At March 31, |         
|                                                                                                                                                                                              |  | NOTES |  | 2012         |          |   | 2013    |  |          | 2014    |  |  | 2014     |  
|                                                                                                                                                                                              |  |       |  | RMB000      |          |   | RMB000 |  |          | RMB000 |  |  | US$000  |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  | (Note 2) |  
|ASSETS                                                                                                                                                                                        |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Current assets                                                                                                                                                                                |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Cash and cash equivalents                                                                                                                                                                     |  | 13    |  |              | 137,538  |   |         |  | 135,025  |         |  |  | 79,057   |   |  |  | 12,717  |  
|Term deposits                                                                                                                                                                                 |  | 13    |  |              | 438,393  |   |         |  | 473,277  |         |  |  | 295,804  |   |  |  | 47,584  |  
|Short-term investments                                                                                                                                                                        |  | 14    |  |              |         |   |         |  |         |         |  |  | 52,569   |   |  |  | 8,457   |  
|Investment at fair value through profit or loss (FVTPL)                                                                                                                                     |  | 15    |  |              |         |   |         |  |         |         |  |  | 166,073  |   |  |  | 26,715  |  
|Trade and other receivables                                                                                                                                                                   |  | 17    |  |              | 103,372  |   |         |  | 80,274   |         |  |  | 95,499   |   |  |  | 15,362  |  
|Amounts due from related parties                                                                                                                                                              |  | 23    |  |              | 126      |   |         |  | 523      |         |  |  | 160      |   |  |  | 26      |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|                                                                                                                                                                                              |  |       |  |              | 679,429  |   |         |  | 689,099  |         |  |  | 689,162  |   |  |  | 110,861 |  
|Assets classified as held for sale                                                                                                                                                            |  | 19    |  |              |         |   |         |  |         |         |  |  | 35,274   |   |  |  | 5,674   |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Total current assets                                                                                                                                                                          |  |       |  |              | 679,429  |   |         |  | 689,099  |         |  |  | 724,436  |   |  |  | 116,535 |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Non-current assets                                                                                                                                                                            |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Property and equipment                                                                                                                                                                        |  | 18    |  |              | 32,856   |   |         |  | 15,170   |         |  |  | 7,605    |   |  |  | 1,223   |  
|Interest in associates                                                                                                                                                                        |  | 19    |  |              | 714      |   |         |  | 22,371   |         |  |  | 41,339   |   |  |  | 6,650   |  
|Available-for-sale investments                                                                                                                                                                |  | 16    |  |              | 900      |   |         |  | 7,167    |         |  |  | 6,250    |   |  |  | 1,005   |  
|Other non-current assets                                                                                                                                                                      |  |       |  |              | 2,642    |   |         |  | 5,568    |         |  |  | 4,055    |   |  |  | 653     |  
|Deferred tax assets                                                                                                                                                                           |  | 10    |  |              | 2,210    |   |         |  | 1,765    |         |  |  | 1,968    |   |  |  | 317     |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Total non-current assets                                                                                                                                                                      |  |       |  |              | 39,322   |   |         |  | 52,041   |         |  |  | 61,217   |   |  |  | 9,848   |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Total assets                                                                                                                                                                                  |  |       |  |              | 718,751  |   |         |  | 741,140  |         |  |  | 785,653  |   |  |  | 126,383 |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|                                                                                                                                                                                              |  |       |  |              |         
|EQUITY AND LIABILITIES                                                                                                                                                                        |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Current liabilities                                                                                                                                                                           |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Trade and other payables                                                                                                                                                                      |  | 20    |  |              | 121,932  |   |         |  | 122,119  |         |  |  | 153,474  |   |  |  | 24,690  |  
|Income tax liabilities                                                                                                                                                                        |  |       |  |              | 5,675    |   |         |  | 4,787    |         |  |  | 10,699   |   |  |  | 1,721   |  
|Amounts due to related parties                                                                                                                                                                |  | 23    |  |              | 871      |   |         |  | 4,054    |         |  |  | 11,201   |   |  |  | 1,802   |  
|Deferred revenue                                                                                                                                                                              |  |       |  |              | 10,038   |   |         |  | 9,062    |         |  |  | 6,350    |   |  |  | 1,021   |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Total current liabilities                                                                                                                                                                     |  |       |  |              | 138,516  |   |         |  | 140,022  |         |  |  | 181,724  |   |  |  | 29,234  |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Total liabilities                                                                                                                                                                             |  |       |  |              | 138,516  |   |         |  | 140,022  |         |  |  | 181,724  |   |  |  | 29,234  |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Equity                                                                                                                                                                                        |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Share capital (US$0.00005 par value, 937,857,200 shares authorized; 258,174,600, 250,411,948 and 239,461,886
shares issued and outstanding as of March 31, 2012, 2013 and 2014, respectively) |  | 21    |  |              | 92       |   |         |  | 89       |         |  |  | 86       |   |  |  | 12      |  
|Share premium                                                                                                                                                                                 |  |       |  |              | 642,495  |   |         |  | 625,651  |         |  |  | 637,451  |   |  |  | 102,545 |  
|Reserves                                                                                                                                                                                      |  |       |  |              | 152,526  |   |         |  | 171,718  |         |  |  | 154,326  |   |  |  | 24,826  |  
|Statutory reserve                                                                                                                                                                             |  |       |  |              | 1,000    |   |         |  | 1,000    |         |  |  | 1,000    |   |  |  | 160     |  
|Accumulated deficit                                                                                                                                                                           |  |       |  |              | (214,938 | ) |         |  | (197,826 | )       |  |  | (192,644 | ) |  |  | (30,990 | )
|Subscription receivables                                                                                                                                                                      |  |       |  |              | (1,284   | ) |         |  |         |         |  |  |         |   |  |  |        |  
|Treasury stock                                                                                                                                                                                |  |       |  |              |         |   |         |  | (2       | )       |  |  | (1       | ) |  |  | (0      | )
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Equity attributable to owners of the Company                                                                                                                                                  |  |       |  |              | 579,891  |   |         |  | 600,630  |         |  |  | 600,218  |   |  |  | 96,553  |  
|Non-controlling interests                                                                                                                                                                     |  |       |  |              | 344      |   |         |  | 488      |         |  |  | 3,711    |   |  |  | 596     |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Total equity                                                                                                                                                                                  |  |       |  |              | 580,235  |   |         |  | 601,118  |         |  |  | 603,929  |   |  |  | 97,149  |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Total equity and liabilities                                                                                                                                                                  |  |       |  |              | 718,751  |   |         |  | 741,140  |         |  |  | 785,653  |   |  |  | 126,383 |  
|                                                                                                                                                                                              |  |       |  |              |          |   |         |  |          |         |  |  |          |   |  |  |         |  



F-5



---

##### Table of Contents

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



|                                                   |  |              |    |   |                |  |    |              |  |  |            |   |  |                  |         |   |                         |  |       |                    |  |  |                                                 |   |  |                          |          |   |         |  |         |   |  |  |       |   |  |  |         |  
|-------------------------------------------------- |  | ------------ | -- | - | -------------- |  | -- | ------------ |  |  | ---------- | - |  | ---------------- | ------- | - | ----------------------- |  | ----- | ------------------ |  |  | ----------------------------------------------- | - |  | ------------------------ | -------- | - | ------- |  | ------- | - |  |  | ----- | - |  |  | ------- | -
|                                                   |  | Sharecapital |    |   | Treasuryshares |  |    | Sharepremium |  |  | Reserves * |   |  | Statutoryreserve |         |   | Subscriptionreceivables |  |       | Accumulateddeficit |  |  | Total equityattributable toowners ofthe Company |   |  | Non-controllinginterests |          |   | Total   | 
|                                                   |  | RMB000      |    |   | RMB000        |  |    | RMB000      |  |  | RMB000    |   |  | RMB000          |         |   | RMB000                 |  |       | RMB000            |  |  | RMB000                                         |   |  | RMB000                  |          |   | RMB000 | 
|                                                   |  |              |    |   |                |  |    |              |  | 
|Balance at April 1, 2011                           |  |              | 92 |   |                |  |   |              |  |  | 635,116    |   |  |                  | 112,938 |   |                         |  | 1,000 |                    |  |  |                                                |   |  |                          | (247,907 | ) |         |  | 501,239 |   |  |  | 301   |   |  |  | 501,540 |  
|Profit and total comprehensive profit for the year |  |              |   |   |                |  |   |              |  |  |           |   |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          | 32,969   |   |         |  | 32,969  |   |  |  | (40   | ) |  |  | 32,929  |  
|Share-based compensation                           |  |              |   |   |                |  |   |              |  |  |           |   |  |                  | 45,683  |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  | 45,683  |   |  |  |      |   |  |  | 45,683  |  
|Derecognition of a subsidiary                      |  |              |   |   |                |  |   |              |  |  |           |   |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  |        |   |  |  | (301  | ) |  |  | (301    | )
|Capital injection from non-controlling shareholder |  |              |   |   |                |  |   |              |  |  |           |   |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  |        |   |  |  | 384   |   |  |  | 384     |  
|Exercise of share options                          |  |              |   |   |                |  |   |              |  |  | 7,379      |   |  |                  | (6,095  | ) |                         |  |      |                    |  |  | (1,284                                          | ) |  |                          |         |   |         |  |        |   |  |  |      |   |  |  |        |  
|                                                   |  |              |    |   |                |  |    |              |  |  |            |   |  |                  |         |   |                         |  |       |                    |  |  |                                                 |   |  |                          |          |   |         |  |         |   |  |  |       |   |  |  |         |  
|Balance at March 31, 2012                          |  |              | 92 |   |                |  |   |              |  |  | 642,495    |   |  |                  | 152,526 |   |                         |  | 1,000 |                    |  |  | (1,284                                          | ) |  |                          | (214,938 | ) |         |  | 579,891 |   |  |  | 344   |   |  |  | 580,235 |  
|Profit and total comprehensive profit for the year |  |              |   |   |                |  |   |              |  |  |           |   |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          | 17,112   |   |         |  | 17,112  |   |  |  | 144   |   |  |  | 17,256  |  
|Share-based compensation                           |  |              |   |   |                |  |   |              |  |  |           |   |  |                  | 24,457  |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  | 24,457  |   |  |  |      |   |  |  | 24,457  |  
|Partial disposal of subsidiaries                   |  |              |   |   |                |  |   |              |  |  |           |   |  |                  | 2,001   |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  | 2,001   |   |  |  |      |   |  |  | 2,001   |  
|Exercise of share options                          |  |              |   |   |                |  |   |              |  |  | 6,384      |   |  |                  | (5,191  | ) |                         |  |      |                    |  |  | 1,284                                           |   |  |                          |         |   |         |  | 2,477   |   |  |  |      |   |  |  | 2,477   |  
|Restricted share vested                            |  |              |   |   |                |  |   |              |  |  | 2,075      |   |  |                  | (2,075  | ) |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  |        |   |  |  |      |   |  |  |        |  
|Repurchase of ordinary shares                      |  |              | (3 | ) |                |  | (2 | )            |  |  | (25,303    | ) |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  | (25,308 | ) |  |  |      |   |  |  | (25,308 | )
|                                                   |  |              |    |   |                |  |    |              |  |  |            |   |  |                  |         |   |                         |  |       |                    |  |  |                                                 |   |  |                          |          |   |         |  |         |   |  |  |       |   |  |  |         |  
|Balance at March 31, 2013                          |  |              | 89 |   |                |  | (2 | )            |  |  | 625,651    |   |  |                  | 171,718 |   |                         |  | 1,000 |                    |  |  |                                                |   |  |                          | (197,826 | ) |         |  | 600,630 |   |  |  | 488   |   |  |  | 601,118 |  
|Profit and total comprehensive profit for the year |  |              |   |   |                |  |   |              |  |  |           |   |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          | 5,251    |   |         |  | 5,251   |   |  |  | (594  | ) |  |  | 4,657   |  
|Share-based compensation                           |  |              |   |   |                |  |   |              |  |  |           |   |  |                  | 14,562  |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  | 14,562  |   |  |  | 2,916 |   |  |  | 17,478  |  
|Derecognition of a subsidiary                      |  |              |   |   |                |  |   |              |  |  |           |   |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  |        |   |  |  | (304  | ) |  |  | (304    | )
|Capital injection from non-controlling shareholder |  |              |   |   |                |  |   |              |  |  |           |   |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  |        |   |  |  | 1,205 |   |  |  | 1,205   |  
|Exercise of share options                          |  |              | 2  |   |                |  |   |              |  |  | 37,590     |   |  |                  | (30,456 | ) |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  | 7,136   |   |  |  |      |   |  |  | 7,136   |  
|Restricted share vested                            |  |              |   |   |                |  |   |              |  |  | 1,498      |   |  |                  | (1,498  | ) |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  |        |   |  |  |      |   |  |  |        |  
|Repurchase of ordinary shares                      |  |              |   |   |                |  | (4 | )            |  |  | (27,288    | ) |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          | (69      | ) |         |  | (27,361 | ) |  |  |      |   |  |  | (27,361 | )
|Cancellation of repurchased shares                 |  |              | (5 | ) |                |  | 5  |              |  |  |           |   |  |                  |        |   |                         |  |      |                    |  |  |                                                |   |  |                          |         |   |         |  |        |   |  |  |      |   |  |  |        |  
|                                                   |  |              |    |   |                |  |    |              |  |  |            |   |  |                  |         |   |                         |  |       |                    |  |  |                                                 |   |  |                          |          |   |         |  |         |   |  |  |       |   |  |  |         |  
|Balance at March 31, 2014                          |  |              | 86 |   |                |  | (1 | )            |  |  | 637,451    |   |  |                  | 154,326 |   |                         |  | 1,000 |                    |  |  |                                                |   |  |                          | (192,644 | ) |         |  | 600,218 |   |  |  | 3,711 |   |  |  | 603,929 |  
|                                                   |  |              |    |   |                |  |    |              |  |  |            |   |  |                  |         |   |                         |  |       |                    |  |  |                                                 |   |  |                          |          |   |         |  |         |   |  |  |       |   |  |  |         |  



|* | Reserves include share-based compensation reserves, reserve from the modification of convertible redeemable preferred shares, and reserve from partial disposal of
subsidiaries that do not result in the Group losing control. At the time when the share options are exercised, the amount previously recognized in reserves will be transferred to share premium.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-6



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##### Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|----------------------------------------------------------------------------------------- |  | --------------------- | -------- | - | ------- |  | -------- | ------- |  |  | -------- | - |  |  | ------- | -
|                                                                                          |  | Years Ended March 31, |         
|                                                                                          |  | 2012                  |          |   | 2013    |  |          | 2014    |  |  | 2014     |  
|                                                                                          |  | RMB000               |          |   | RMB000 |  |          | RMB000 |  |  | US$000  |  
|                                                                                          |  |                       |          |   |         |  |          |         |  |  | (Note 2) |  
|Operating activities                                                                      |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Profit before tax                                                                         |  |                       | 36,531   |   |         |  | 19,989   |         |  |  | 11,875   |   |  |  | 1,910   |  
|Adjustments for:                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Share of results of associates                                                            |  |                       | 886      |   |         |  | 935      |         |  |  | (2,428   | ) |  |  | (391    | )
|Gain on derecognition of a subsidiary                                                     |  |                       | (1,930   | ) |         |  |         |         |  |  |         |   |  |  |        |  
|Net foreign exchange loss                                                                 |  |                       | 3,266    |   |         |  | 429      |         |  |  | 2,061    |   |  |  | 332     |  
|Interest income                                                                           |  |                       | (12,110  | ) |         |  | (16,209  | )       |  |  | (15,913  | ) |  |  | (2,560  | )
|Amortization of government grant related to property and equipment                        |  |                       | (1,468   | ) |         |  | (489     | )       |  |  |         |   |  |  |        |  
|Loss (gain) on disposal of property and equipment                                         |  |                       |         |   |         |  | 68       |         |  |  | (208     | ) |  |  | (33     | )
|Depreciation                                                                              |  |                       | 21,082   |   |         |  | 21,596   |         |  |  | 8,654    |   |  |  | 1,392   |  
|Changes in fair value of investment at FVTPL                                              |  |                       |         |   |         |  |         |         |  |  | (1,073   | ) |  |  | (173    | )
|Income on short-term investment and loan receivable                                       |  |                       | (450     | ) |         |  |         |         |  |  | (2,569   | ) |  |  | (413    | )
|Share-based compensation                                                                  |  |                       | 45,683   |   |         |  | 24,457   |         |  |  | 17,478   |   |  |  | 2,812   |  
|Impairment of investment in an associate                                                  |  |                       |         |   |         |  | 1,367    |         |  |  | 727      |   |  |  | 117     |  
|Impairment of an available-for-sale investment                                            |  |                       |         |   |         |  |         |         |  |  | 800      |   |  |  | 129     |  
|Changes in working capital:                                                               |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Decrease (increase) in trade and other receivables                                        |  |                       | (18,856  | ) |         |  | 22,072   |         |  |  | (6,158   | ) |  |  | (991    | )
|Increase in amounts due from related parties                                              |  |                       |         |   |         |  |         |         |  |  | (148     | ) |  |  | (24     | )
|Increase (decrease) in trade and other payables                                           |  |                       | (11,981  | ) |         |  | (446     | )       |  |  | 31,822   |   |  |  | 5,119   |  
|Increase (decrease) in amounts due to related parties                                     |  |                       | (24      | ) |         |  | 3,183    |         |  |  | 7,147    |   |  |  | 1,150   |  
|Increase (decrease) in deferred revenue                                                   |  |                       | 3,017    |   |         |  | (487     | )       |  |  | (2,712   | ) |  |  | (436    | )
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Cash generated from operations                                                            |  |                       | 63,646   |   |         |  | 76,465   |         |  |  | 49,355   |   |  |  | 7,940   |  
|Income tax paid                                                                           |  |                       | (6,551   | ) |         |  | (3,176   | )       |  |  | (1,509   | ) |  |  | (243    | )
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Net cash from operating activities                                                        |  |                       | 57,095   |   |         |  | 73,289   |         |  |  | 47,846   |   |  |  | 7,697   |  
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|                                                                                          |  |                       |          |  
|Investing activities                                                                      |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Interest income received                                                                  |  |                       | 12,110   |   |         |  | 16,209   |         |  |  | 12,832   |   |  |  | 2,064   |  
|Net cash inflow (outflow) on derecognition of a subsidiary                                |  |                       | 205      |   |         |  |         |         |  |  | (304     | ) |  |  | (49     | )
|Purchase of term deposits                                                                 |  |                       | (538,393 | ) |         |  | (667,687 | )       |  |  | (330,804 | ) |  |  | (53,215 | )
|Redemption of term deposits                                                               |  |                       | 252,718  |   |         |  | 632,803  |         |  |  | 508,277  |   |  |  | 81,764  |  
|Purchases of property and equipment                                                       |  |                       | (11,339  | ) |         |  | (3,424   | )       |  |  | (2,019   | ) |  |  | (325    | )
|Receipt of government grant related to acquisition of property and equipment              |  |                       | 1,957    |   |         |  |         |         |  |  |         |   |  |  |        |  
|Proceeds from disposal of property and equipment                                          |  |                       | 40       |   |         |  | 79       |         |  |  | 672      |   |  |  | 108     |  
|Investments in associates (including down payment)                                        |  |                       | (1,100   | ) |         |  | (25,859  | )       |  |  | (50,216  | ) |  |  | (8,078  | )
|Investments in available-for-sale investment                                              |  |                       | (900     | ) |         |  | (6,267   | )       |  |  |         |   |  |  |        |  
|Purchases of investment at FVTPL                                                          |  |                       |         |   |         |  |         |         |  |  | (165,000 | ) |  |  | (26,543 | )
|Purchases of short-term investments                                                       |  |                       |         |   |         |  |         |         |  |  | (50,000  | ) |  |  | (8,043  | )
|Payment for loan receivable                                                               |  |                       | (19,550  | ) |         |  |         |         |  |  |         |   |  |  |        |  
|Receipt of loan receivable                                                                |  |                       | 19,550   |   |         |  |         |         |  |  |         |   |  |  |        |  
|Decrease (increase) in amounts due from related parties                                   |  |                       | 363      |   |         |  | (397     | )       |  |  | 511      |   |  |  | 82      |  
|Investment income received                                                                |  |                       | 450      |   |         |  |         |         |  |  |         |   |  |  |        |  
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Net cash used in investing activities                                                     |  |                       | (283,889 | ) |         |  | (54,543  | )       |  |  | (76,051  | ) |  |  | (12,235 | )
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|                                                                                          |  |                       |          |  
|Financing activities                                                                      |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Capital contribution from non-controlling shareholder                                     |  |                       | 384      |   |         |  |         |         |  |  | 1,205    |   |  |  | 194     |  
|Proceeds from partial disposal of subsidiaries                                            |  |                       |         |   |         |  | 2,001    |         |  |  |         |   |  |  |        |  
|Payments and advance payments for share repurchase                                        |  |                       |         |   |         |  | (25,308  | )       |  |  | (34,159  | ) |  |  | (5,495  | )
|Proceeds from exercise of share options                                                   |  |                       |         |   |         |  | 2,477    |         |  |  | 7,136    |   |  |  | 1,148   |  
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Net cash (used in) from financing activities                                              |  |                       | 384      |   |         |  | (20,830  | )       |  |  | (25,818  | ) |  |  | (4,153  | )
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|                                                                                          |  |                       |          |  
|Net decrease in cash and cash equivalents                                                 |  |                       | (226,410 | ) |         |  | (2,084   | )       |  |  | (54,023  | ) |  |  | (8,691  | )
|Cash and cash equivalents at beginning of year                                            |  |                       | 367,214  |   |         |  | 137,538  |         |  |  | 135,025  |   |  |  | 21,721  |  
|Effect of foreign exchange rate changes on the balance of cash held in foreign currencies |  |                       | (3,266   | ) |         |  | (429     | )       |  |  | (1,945   | ) |  |  | (313    | )
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  
|Cash and cash equivalents at end of year                                                  |  |                       | 137,538  |   |         |  | 135,025  |         |  |  | 79,057   |   |  |  | 12,717  |  
|                                                                                          |  |                       |          |   |         |  |          |         |  |  |          |   |  |  |         |  

Supplemental information of non-cash transaction:

As of March 31, 2012, 2013 and 2014, acquisitions of property and equipment amounted to approximately RMB398,000, RMB1,031,000 and
RMB565,000, respectively, were unsettled and included in other payables.



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##### Table of Contents

SKY-MOBI LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



|1. | ORGANIZATION AND PRINCIPAL ACTIVITIES
|-- | -------------------------------------

Sky-mobi Limited (the Company) was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on April 20, 2007. The Company through its subsidiaries
(collectively referred to as the Group) is principally engaged in the operation of a mobile application platform embedded on mobile phones to provide mobile application store and services in the Peoples Republic of China (the
PRC). The address of the principal place of the Groups business is 10/F, Building B, United Building, No. 2 Zijinghua Road, Hangzhou, Zhejiang Province, PRC. The Companys registered office is located at Cricket Square,
Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.

The consolidated financial statements of the
Group are presented in Renminbi (RMB), which is the functional currency of the Company.

The Company holds its
interests in its operating subsidiaries through Hangzhou Dianneng Technologies Co., Ltd. (Dianneng) and Hangzhou Tiandian Investment Consulting Co., Ltd. (Tiandian) (collectively the PRC holding entities), which
were established in the PRC on December 24, 2009 and December 6, 2011, respectively. The Company does not conduct any substantive operations of its own, but conducts its primary business operation through Hangzhou Sky Network Technologies
Co., Ltd. (Sky), Hangzhou Mijia Technologies Co., Ltd. (Mijia), Hangzhou Fanyi Technologies Co., Ltd. (Fanyi), Hangzhou Feineng Technologies Co., Ltd. (Feineng), Hangzhou Miyi Technologies Co., Ltd.
(Miyi), Hangzhou Najia Technologies Co., Ltd. (Najia), Hangzhou Tianchu Technologies Co., Ltd. (Tianchu), Hangzhou Kaimi Technologies Co., Ltd. (Kaimi), Hangzhou Dangyi Technologies Co., Ltd.
(Dangyi), Nanjing Zunqi Network Information Technologies Co., Ltd. (Zunqi), Nanjing Geyuan Information Technologies Co., Ltd. (Geyuan), and Hangzhou Sky Investment Co., Ltd. (Sky Investment)
(collectively the PRC Operational Entities, or the special purpose entities), which are controlled by Dianneng or Tiandian through certain contractual arrangements as of March 31, 2012, 2013 and 2014. These special
purpose entities (SPEs) hold the requisite licenses and permits necessary to conduct the telecommunication business.

PRC laws and regulations restrict foreign ownership of telecommunication businesses. To comply with these foreign ownership restrictions, Pusida (Beijing) Technologies Co., Ltd. (Pusida)
entered into certain exclusive agreements with the equity holders of Mijia and Sky on August 1, 2007 and then Pusida transferred these exclusive agreements with the equity holders of Mijia and Sky to Dianneng on July 1, 2010. In addition,
Dianneng entered into certain exclusive agreements with the equity holders of Fanyi, Feineng, Miyi, Najia, Tianchu, Zunqi, Geyuan, Kaimi and Dangyi on December 24, 2009, December 3, 2010, November 30, 2012, November 30,
2012, December 6, 2012, June 26, 2013, October 29, 2013, March 3, 2014 and March 3, 2014, respectively. Tiandian entered into certain exclusive agreements with the equity holders of Sky Investment on
December 6, 2011. The exclusive agreements, namely, Exclusive Business Cooperation or Services Agreements, Purchase Option Agreements, Equity Pledge Agreements and Power of Attorney Agreements, taken as a whole, provide the Company with the
rights to receive substantially all of the economic benefits from each of the PRC Operational Entities. In addition, all the directors in each of the PRC Operational Entities shall be assigned by the Company. Accordingly, the Company is able to
monitor, supervise and effectively control the PRC Operational Entities businesses, operations and financial policies so as to use its power to affect the amount of returns to the Company. In addition, through such agreements, the Company is
able to acquire the equity interests in the PRC Operational Entities when permitted by PRC law.

In determining whether the
Group has the control over the SPEs, the Group believes the Groups rights under the terms of the purchase option agreements provide it with a substantive kick out right. More specifically, the Group believes the terms of the purchase option
agreements are valid, binding and enforceable under PRC laws and regulations currently in effect. A simple majority vote of the Groups board of directors is required to pass a resolution to exercise the Groups rights under the purchase
option agreements, for which consent of the shareholders of the SPEs is not required. The Groups rights under the purchase option agreements give the Group the power to control the shareholders of the SPEs and thus the power to direct the
activities that most significantly impact the SPEs economic performance. In addition, the Groups rights under the powers of attorney also reinforce the Groups abilities to direct the activities that most significantly impact the
SPEs economic performance. The Group also believes that this ability to exercise control ensures that the SPEs will continue to execute and renew Exclusive Business Cooperation or Services Agreements and pay service fees to the Group. The
Exclusive Business Cooperation or Services Agreements can be renewed and may only be terminated at the Groups sole discretion. The Group has the sole discretion to determine the amounts of the technical and consulting service fees. As a
result, the Group believes that it has the rights to receive substantially all of the economic benefits from the SPEs.



F-8



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##### Table of Contents

Following is a summary of the material provisions of the aforementioned agreements:

Exclusive Business Cooperation or Services Agreements. The equity owners of the SPEs have entered into service
agreements with the PRC holding entities under which SPEs engage the relevant PRC holding entities as their exclusive providers of technical and business support and strategy consulting services. SPEs shall pay to the relevant PRC holding entities
service fees and royalties. The PRC holding entities have the sole discretion to determine the amounts of the service fee. Each agreement has a term of 10 years or 20 years and is renewable at the PRC holding entities sole discretion.

Purchase Option Agreements. The equity owners of the relevant SPEs have granted the relevant PRC holding
entities or their designees an exclusive option to purchase all or part of their equity interests in the relevant SPEs, or all or part of the assets of the relevant SPEs, for a purchase price equal to the registered capital of the relevant SPEs or
such higher price as required under PRC law at the time of purchase, at any time determined by the relevant PRC holding entities and to the extent permitted by PRC law. Also each relevant shareholder has agreed not to transfer, assign, pledge or
otherwise dispose of their interest in the relevant SPE without the prior written consent of the relevant PRC holding entities. Except for the purchase option agreement for Fanyi which has a term of 10 years and is renewable at Diannengs sole
discretion, the purchase option agreements for other SPEs will terminate when the equity interests in those SPEs are legally transferred to the relevant PRC holding entities or their designees.

Equity Pledge Agreements. The equity owners of the SPEs pledge their respective equity interest in the relevant SPEs, to
the relevant PRC holding entities to secure their obligations under the respective Exclusive Business Cooperation or Services Agreements. The equity pledge agreements are continuously effective until the full performance of the contractual
obligations and the full repayment of the liabilities under the Exclusive Cooperation or Services Agreements.

Power of
Attorney. The equity owners of the SPEs have executed a power of attorney to irrevocably grant to PRC holding entities or their designees the power of attorney to exercise all of their rights as shareholders of SPEs, including the right to
declare dividends, appoint and elect board members and senior management members and other voting rights. The power of attorney for Fanyi does not contain any expiration provision. Each power of attorney of the remaining SPEs has a term of 10 years
or 20 years and is renewable at the relevant PRC holding entities sole discretion.

Effective control over the PRC
Operational Entities businesses was transferred to the Company through the series of contractual arrangements without transferring legal ownership in the PRC Operational Entities. As a result of these contractual arrangements, the Group has
power over the PRC Operational Entities, has rights to variable returns from its involvement with the PRC Operational Entities and has the ability to affect those returns through its power over the PRC Operational Entities and is considered to have
control over the PRC Operational Entities. Accordingly, the Company consolidates the PRC Operational Entities.

Risks in
relation to the SPE structure are disclosed in Note 4.



F-9



---

##### Table of Contents

The Company has the following major subsidiaries and consolidated SPEs:



|                                                              |  |                                             |      |                                                                        |     |      |                      |  |      |   |  |  |       |   |  |                                                                                         
|------------------------------------------------------------- |  | ------------------------------------------- | ---- | ---------------------------------------------------------------------- | --- | ---- | -------------------- |  | ---- | - |  |  | ----- | - |  | ----------------------------------------------------------------------------------------
|                                                              |  | Place and dateofestablishment/incorporation |      | Portion of economic ownershipinterest andvoting power held
atMarch 31, |     |      | Principal activities
|Company name                                                  |  |                                             | 2012 |                                                                        |     | 2013 |                      |  | 2014 |   | 
|                                                              |  |                                             |      |                                                                        |    
|Subsidiaries:                                                 |  |                                             |      |                                                                        |     |      |                      |  |      |   |  |  |       |   |  |                                                                                         
|Pusida                                                        |  | PRCAugust 1,2007                            |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Provision of management consultancy and technical services. Inactive since July 1, 2010.
|Dianneng                                                      |  | PRCDecember 24,2009                         |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Provision of management consultancy and technical services                              
|Profit Star Software (Hong Kong) Limited (Profit Star HK)   |  | Hong KongMay 25, 2010                       |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Investment holding                                                                      
|JSky Technology Limited (JSky)                              |  | CaymanAugust 9,2011                         |      |                                                                        | 60  | %    |                      |  | 60   | % |  |  | Nil   | 1 |  | Provision of mobile application services                                                
|Powerplay Technology Limited (Powerplay)                    |  | Hong KongSeptember 14,2011                  |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Provision of mobile application services                                                
|Tiandian                                                      |  | PRCDecember 6,2011                          |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Investment and consulting                                                               
|Shanghai Texuan Information Technologies Co., Ltd. (Texuan) |  | PRCMarch 6,2012                             |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Development of mobile application software                                              
|Consolidated SPEs and subsidiaries of SPEs:                   |  |                                             |      |                                                                        |     |      |                      |  |      |   |  |  |       |   |  |                                                                                         
|Sky                                                           |  | PRCNovember 21,2005                         |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Development of mobile application software and provision of mobile application services 
|Mijia                                                         |  | PRCJanuary 12,2007                          |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Provision of mobile application services                                                
|Fanyi                                                         |  | PRCDecember 24,2009                         |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Provision of mobile application services                                                
|Feineng                                                       |  | PRCDecember 3,2010                          |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Provision of mobile application services                                                
|Sky Investment                                                |  | PRCDecember 6,2011                          |      |                                                                        | 100 | %    |                      |  | 100  | % |  |  | 100   | % |  | Investment and consulting                                                               
|Miyi                                                          |  | PRCNovember 30,2012                         |      |                                                                        | Nil |      |                      |  | 100  | % |  |  | 100   | % |  | Provision of mobile application services                                                
|Najia                                                         |  | PRCNovember 30,2012                         |      |                                                                        | Nil |      |                      |  | 100  | % |  |  | 100   | % |  | Provision of mobile application services                                                
|Tianchu                                                       |  | PRCDecember 6,2012                          |      |                                                                        | Nil |      |                      |  | 100  | % |  |  | 100   | % |  | Provision of mobile application services                                                
|Zunqi                                                         |  | PRCJune 26,2013                             |      |                                                                        | Nil |      |                      |  | Nil  |   |  |  | 100   | % |  | Provision of mobile application services                                                
|Geyuan                                                        |  | PRCOctober 29,2013                          |      |                                                                        | Nil |      |                      |  | Nil  |   |  |  | 100   | % |  | Provision of mobile application services                                                
|Kaimi                                                         |  | PRCMarch 3,2014                             |      |                                                                        | Nil |      |                      |  | Nil  |   |  |  | 100   | % |  | Provision of mobile application services                                                
|Dangyi                                                        |  | PRCMarch 3,2014                             |      |                                                                        | Nil |      |                      |  | Nil  |   |  |  | 100   | % |  | Provision of mobile application services                                                
|Subsidiary of consolidated SPEs subsidiaries of SPEs:         |  |                                             |      |                                                                        |     |      |                      |  |      |   |  |  |       |   |  |                                                                                         
|Hangzhou Mopin Technologies Co., Ltd. (Mopin)               |  | PRCJune 14,2013                             |      |                                                                        | Nil |      |                      |  | Nil  |   |  |  | 83.88 | % |  | Provision of mobile application services                                                



|1 | Jsky was dissolved on July 8, 2013.
|- | -----------------------------------



F-10



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##### Table of Contents

The above table lists the subsidiaries and consolidated SPEs of the Group which, in the
opinion of the Directors, principally affected the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.



|2. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------

Statement of compliance

The Groups consolidated financial
statements comply with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB).

Basis of preparation

The Groups consolidated financial
statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair value as explained in the accounting policies set out below. Historical cost is generally based on fair value of the
consideration given in exchange of assets, goods or services.

Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an
asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in the Financial Information is determined on such basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and
measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, which are described as follows:



| |  |  | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or
indirectly; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3 inputs are unobservable inputs for asset or liability.
| | - |  | --------------------------------------------------------------

The principal accounting policies are set out below.



F-11



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##### Table of Contents

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities, including SPEs, controlled by the
Company (its subsidiaries). Control is achieved where the Company



| |  |  | has power over the investee;
| | - |  | ----------------------------



| |  |  | is exposed, or has rights, to variable returns from its involvement with the investee; and
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | has the ability to use its power to affect its returns.
| | - |  | -------------------------------------------------------

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statements of profit or loss and other comprehensive income from the date the Group gains control until the date
when the Group ceased to control the subsidiary.

Profit or loss and each item of other comprehensive income are attributed to
the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a
deficit balance.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.

Changes in the Groups ownership interests
in existing subsidiaries

Changes in the Groups ownership interests in existing subsidiaries that do not result
in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Groups interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the
subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between
(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any
non-controlling interests. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e.
reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Investments in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results
and assets and liabilities of associates are incorporated in the consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statements of financial position at cost as adjusted for post-acquisition changes in the
Groups share of the profit or loss and other comprehensive income of the associate, less any impairment in the value of the investment. When the Groups share of the loss of an associate equals or exceeds its interest in that associate,
the Group discontinues recognizing its share of further losses. An additional share of losses is provided for and a liability is recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf
of that associate.

Any excess of the cost of the investment in associates over the amount of the Groups share of net
fair value of the net assets of the associates at the date of acquisition is included in the carrying amount of the investment. The requirements of IAS 39 are applied to determine whether it is necessary to recognize any impairment loss with respect
to the Groups investment in an associate. The Group assesses the impairment of the investments in associates by considering factors including, but not limited to, current economic and market conditions, operating performance of the associates,
including current earnings trends and undiscounted cash flows, and other company-specific information, such as recent financing rounds. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in
accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any reversal of impairment loss is recognized to the extent that
the recoverable amount of the investment subsequently increases.



F-12



---

##### Table of Contents

The Group discontinues the use of the equity method from the date when the investment ceases
to be an associate, or when the investment is classified as held for sale. The difference between the carrying amount of the associate at the date the equity method was discontinued, and any proceeds from disposing of an interest in the associate is
included in the determination of the gain or loss on disposal of the associate.

When a group entity transacts with an
associate of the Group, profits and losses resulting from the transactions with the associates are recognized in the Groups consolidated financial statements only to the extent of the Groups interest in the relevant associate that are
not related to the Group.

Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale in current assets if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and
customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving disposal of an investment in an associate, the investment that will be
disposed of is classified as held for sale when the criteria described above are met, and the Group discontinues the use of the equity method in relation to the investment from the time when the investment is classified as held for sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount or fair
value less costs of disposal.

Revenue recognition

Revenue is recognized when it is probable that the economic benefits will flow to the Group, the revenue can be measured reliably and
collectability is reasonably assured.

The Group evaluates agreements with the industry participants including mobile service
providers, mobile network operators, content providers, handset companies and independent payment processing agents in order to determine whether or not it acts as the principal or as an agent in each arrangement, and therefore the relevant revenues
should be reported on a gross or net basis. The determination is based on an assessment of various factors, including but not limited to whether the Group (i) is the primary obligor in the arrangement; (ii) has general inventory risk;
(iii) changes the product or performs part of the services; (iv) has latitude in establishing the selling price; (v) has involvement in the determination of product and service specifications.

Application Store Revenues

The Group generates revenue primarily through users purchase of in-app virtual items, premium features and other contents. Handset users can browse and download mobile applications and contents from
the Groups application stores, Maopao App Store and Maopao Game Center. The Group has cooperation agreements with handset companies to pre-install the Maopao platform products on mobile handsets before they reach users. The applications and
contents are predominantly delivered to customers through mobile network operators in China. The Group contracts with mobile service providers, who further contract with and utilize mobile network operators billing channels, as well as
contracts directly with mobile network operators to collect payment from the Groups customers on behalf of the Group. Mobile service providers and mobile network operators are entitled to commissions, which are a percentage of the gross fees
collected from the Groups customers by the mobile network operators.

For revenues from the sale of in-app virtual
items, premium features and other contents from the Groups application stores, the Group recognizes revenue on a gross basis at the time when each purchase is successfully made and the collectability is reasonably assured. The Group recognizes
the commissions retained by mobile service providers and mobile network operators as a cost of revenues in the consolidated statements of profit or loss and other comprehensive income.



F-13



---

##### Table of Contents

Users purchase in-game virtual premium items in certain single-player games. As the virtual
items are immediately consumed, revenue is recognized upon consumption.

Maopao Community Revenues

The Group offers community-based applications, including mobile social games and social network application in its Maopao Community. Users
can charge up with their accounts through a number of payment options, including pre-paid phone cards, pre-paid game cards, bank debit cards and online payment solutions, to purchase virtual items and premium features in the Maopao Community. The
Group refers to such revenues as Maopao Community revenues.

The Group collects payment through payment processing agents or
service providers, who are entitled to a commission for processing customer prepayments.

Maopao Community revenues are
derived from the purchase of in-game virtual items having an unlimited life. Such revenues are initially deferred and are subsequently recognized following the historical user retention pattern over the estimated consumption period of the durable
virtual items, ranging from one to 12 months. The user retention pattern and consumption period are estimated based on the historical data and log-in patterns of paying users, including the average period paying users typically stay active in the
Maopao Community. The Group assesses these estimates at the end of every reporting period.

Other Revenue

The Group also allows content providers, service providers and mobile network operators to sell their mobile applications and other
contents to mobile users through Maopao Platform, for which the Group charges a commission based on a percentage of the revenue earned from those applications or number of active users. The Group records such revenue as other revenues upon receipt
of monthly statements from the content providers, service providers and mobile network operators.

The Group also generates
application store revenues from overseas countries through overseas mobile service providers in the same way disclosed above. The Group recognizes such revenue upon receipt of acknowledgement of successful downloads from these mobile service
providers.

Cost of revenues

Cost of revenues primarily includes commissions paid to mobile service providers, mobile network operators, content providers, handset companies and independent payment processing agents. Cost of revenues
also includes staff salaries, utilities, depreciation of equipment, and office expenses directly related to the operation of the Maopao Platform. The Group usually pays content providers a percentage of the proceeds that are derived from their
content. For certain applications and content titles, the Group makes an insignificant one-time payment to the content provider to acquire all associated rights, all of which are recorded as cost of revenues at the time of payment because such
applications and content titles usually have short life cycles and the acquisition cost for each application or content title is relatively low.

Approximately RMB27.3 million, nil and nil accrued costs payable for content and handset software design were reversed into cost of revenues upon the expiration of the statute of limitations in the years
ended March 31, 2012, 2013 and 2014, respectively. Such accrued costs originated from the incomplete data provided by mobile network operators prior to March 2010.

Leases

Leases are classified as operating leases unless the terms
of the lease transfer substantially all the risks and rewards of ownership to the lessee, which would be classified as finance leases.

The
Group as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

Foreign currencies

In preparing the financial statements of each group entity, transactions in currencies other than the functional currency, which is the currency of the primary economic environment in which the entity
operates, of that entity, or foreign currency, are recorded in the respective entities functional currency at the rates of exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.



F-14



---

##### Table of Contents

Exchange differences arising from the settlement of monetary items, and the retranslation of
monetary items are recognized in profit or loss in the period in which they arise.

Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received.

Government grants are recognized in profit or loss on a
systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or
otherwise acquire non-current assets are recognized as deferred revenue in the consolidated statements of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

Share-based payments

The fair value of services received determined
by reference to the fair value of share options granted at the grant date is expensed on a graded basis over the vesting period with a corresponding increase in equity.

The Group reviews its estimate of the number of options that are expected to ultimately vest. The impact of the revision of the estimates during the vesting period, if any, is recognized in profit or loss
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.

At the time when
the share options are exercised, the amount previously recognized in reserves will be transferred to share premium. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously
recognized in reserve will be transferred to accumulated deficit.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the
consolidated statements of profit or loss and other comprehensive income because of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Groups liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax
is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally
recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary
differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognized for taxable temporary
differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the
temporary differences and they are expected to reverse in the foreseeable future.



F-15



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##### Table of Contents

The carrying amount of deferred tax assets is reviewed at the end of each reporting period
and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realized, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax are
recognized in profit or loss.

Research and development expenses

Expenditure on research activities is recognized as an expense in the period in which it is incurred. An internally-generated intangible
asset arising from development, or from the development phase of an internal project, is recognized if all of the following have been demonstrated:



| |  |  | the technical feasibility of completing the intangible asset so that it will be available for use or sale;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | the intention to complete the intangible asset and use or sell it;
| | - |  | ------------------------------------------------------------------



| |  |  | the ability to use or sell the intangible asset;
| | - |  | ------------------------------------------------



| |  |  | how the intangible asset will generate probable future economic benefits;
| | - |  | -------------------------------------------------------------------------



| |  |  | the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the ability to measure reliably the expenditure attributable to the intangible asset during its development.
| | - |  | ------------------------------------------------------------------------------------------------------------

The amount initially recognized for an internally-generated intangible asset is the sum of the expenditure incurred from the date when
the intangible asset first meets the recognition criteria listed above.

Subsequent to initial recognition, an
internally-generated intangible asset is measured at cost less accumulated amortization and accumulated impairment losses (if any), on the same basis as intangible assets acquired separately.

The Group currently expenses internal and external development costs incurred as all current development costs do not fulfill the above
conditions.

Property and equipment

Property and equipment are stated in the consolidated statements of financial position at cost less subsequent accumulated depreciation and accumulated impairment losses, if any.

Depreciation is computed on a straight-line basis over the following estimated useful lives:



|                       |  |                                         
|---------------------- |  | ----------------------------------------
|Electronic equipment   |  | 2-10 years                              
|Furniture              |  | 5 years                                 
|Office equipment       |  | 3 years                                 
|Leasehold improvements |  | the shorter of the lease term or 3 years
|Motor vehicles         |  | 5 years                                 

The useful lives of the property and equipment are evaluated annually. An item of property and equipment
is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset is included in profit or loss in the period in which the item is
derecognized.



F-16



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##### Table of Contents

Impairment of tangible assets

At the end of the reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Recoverable amount is defined as the
higher of an assets fair value, less cost to sell, and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately.

Cash and cash
equivalents/Term deposits

Cash and cash equivalents include cash on hand and in banks and other short-term highly
liquid investments with original maturities of three months or less which are not restricted as to use. Term deposits represent bank deposits with original maturities of over three months but less than one year when purchased.

Financial instruments

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities,
other than financial assets or financial liabilities at fair value through profit or loss, are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Financial assets

The Groups financial assets are classified into
loans and receivables, financial assets at fair value through profit or loss (FVTPL) and available-for-sale financial assets. The classification depends on the nature and purpose of the financial assets and is determined at the time of
initial recognition. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables, including cash and cash equivalents, term deposits, short-term
investments, loan receivable, trade and other receivables (excluding prepayments) and amounts due from related parties, are carried at amortized cost using the effective interest method, less any identified impairment, unless the effect of
discounting is not material, in which case they are carried at cost, less any identified impairment.

A financial asset may be
designated as FVTPL upon initial recognition if:



| |  |  | such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a
fair value basis, in accordance with the Groups documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract (asset or liability) to be
designated as FVTPL.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Financial assets at FVTPL are measured at fair value, with changes in fair value
recognized directly in profit or loss. The net gain or loss recognized in profit or loss excludes any dividend or interest earned on the financial assets which is included in other gains and losses in the consolidated statements of comprehensive
income.

Available-for-sale financial assets

AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of
each reporting period.

Dividends on AFS equity instruments are recognized in profit or loss when the Groups right to
receive the dividends is established.



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##### Table of Contents

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of the reporting period or when there is
objective evidence that an impairment may exist. Financial assets are considered to be impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the
estimated future cash flows of the financial assets have been affected. Objective evidence of impairment could include:



| |  |  | significant financial difficulty of the issuer or counterparty,
| | - |  | ---------------------------------------------------------------



| |  |  | default or delinquency in interest or principal payments, or
| | - |  | ------------------------------------------------------------



| |  |  | it becoming probable that the borrower will enter bankruptcy or financial reorganization.
| | - |  | -----------------------------------------------------------------------------------------

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are
subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Groups past experience of collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period of 90 days and observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortized cost, an impairment loss is recognized in profit or loss and is measured as the difference between the assets carrying amount and the present value of the
estimated future cash flows discounted at the financial assets original effective interest rate.

The carrying amount of
the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the
allowance account are recognized in profit or loss. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the
impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

For
financial assets carried at cost, the amount of impairment loss is measured as the difference between the assets carrying amount and the present value of the estimated future cash flow, discounted at the current market rate of return for
similar financial assets. Such impairment loss will not be reversed in subsequent period.

Financial liabilities and
equity instruments

Financial liabilities and equity instruments issued by a group entity are classified according to
the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the
proceeds received, net of direct issue costs. Repurchase of the Companys own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the
Companys own equity instruments.

Financial liabilities

Financial liabilities, including trade and other payables and amounts due to related parties, are subsequently measured at amortized cost, using the effective interest method unless the effect of
discounting is not material, in which case, they are carried at cost.

Effective interest method

The effective interest method is a method of calculating the amortized cost of a financial asset or financial liability and of allocating
interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial asset or liability, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition



F-18



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##### Table of Contents

Interest income and expense is recognized on an effective interest basis.

Derecognition

The Group
derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On
derecognition of a financial asset in its entirety, the difference between the assets carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

Financial liabilities are derecognized when the obligation is discharged, cancelled or expires. The difference between the carrying
amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

Translation into United States Dollars

The consolidated financial statements of the Group are stated in RMB. Translations of amounts from RMB into U.S. dollars are solely for the convenience of the reader and were calculated at the rate
of US$1.00 = RMB6.2164, on March 31, 2014, as set forth in the H.10 statistical release of the Federal Reserve Board. The translation is not intended to imply that the RMB amounts could have been, or could be, converted, realized or settled
into U.S. dollars at that rate on March 31, 2014, or at any other rate.



|3. | APPLICATION OF NEW INTERNATIONAL FINANCIAL REPORTING STANDARDS
|-- | --------------------------------------------------------------

In the current year, the Group has applied the following new and revised IFRSs issued by the IASB for the first time.



|                                           |  |                                                                                                                         
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------
|Amendments to IFRSs                        |  | Annual Improvements to IFRSs 2009-2011 Cycle                                                                            
|Amendments to IFRS 7                       |  | Disclosures - Offsetting Financial Assets and Financial Liabilities                                                     
|Amendments to IFRS 10, IFRS 11 and IFRS 12 |  | Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance
|IFRS 10                                    |  | Consolidated Financial Statements                                                                                       
|IFRS 11                                    |  | Joint Arrangements                                                                                                      
|IFRS 12                                    |  | Disclosure of Interests in Other Entities                                                                               
|IFRS 13                                    |  | Fair Value Measurement                                                                                                  
|IAS 19 (as revised in 2011)                |  | Employee Benefits                                                                                                       
|IAS 27 (as revised in 2011)                |  | Separate Financial Statements                                                                                           
|IAS 28 (as revised in 2011)                |  | Investments in Associates and Joint Ventures                                                                            
|Amendments to IAS 1                        |  | Presentation of Items of Other Comprehensive Income                                                                     
|IFRIC 20                                   |  | Stripping Costs in the Production Phase of a Surface Mine                                                               

Except as described below, the application of the new and revised IFRSs in the current year has had no
material impact on the Groups financial performance and positions for the current and prior years and/or disclosures set out in these consolidated financial statements.

The Group has applied the amendments to IAS 1 Presentation of Items of Other Comprehensive Income for the first time in the current year. The amendments introduce new terminology, whose use is not
mandatory, for the statement of comprehensive income and income statement. Under the amendments to IAS 1, the statement of comprehensive income is renamed as the statement of profit or loss and other comprehensive income.
Other than the above mentioned name change, the application of the amendments to IAS 1 has not resulted in any impact on profit or loss, or total comprehensive income of the Group.

New and revised Standards on consolidation, joint arrangements, associates and disclosures

In the current year, the Group has applied for the first time the package of five standards on consolidation, joint arrangements, associates and disclosures comprising IFRS 10 Consolidated Financial
Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (as revised in 2011) Separate Financial Statementsand IAS 28 (as revised in 2011) Investments in Associates and Joint
Ventures, together with the amendments to IFRS 10, IFRS 11 and IFRS 12 regarding transitional guidance.

IAS 27 (as
revised in 2011) is not applicable to the Group as it deals only with separate financial statements.



F-19



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##### Table of Contents

The impact of the application of the relevant standards is set out below.

Impact of the application of IFRS 10

IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statementsthat deal with consolidated financial statements and SIC-12 Consolidation - Special Purpose Entities. IFRS
10 changes the definition of control such that an investor has control over an investee when a) it has power over the investee; b) it is exposed, or has rights, to variable returns from its involvement with the investee and c) has the ability to use
its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. Additional guidance has been included in IFRS 10 to explain when an investor has control over an investee.

The directors of the Company reviewed the Group structure and assessed the Groups investees in accordance with requirements of IFRS 10. The directors of the Company concluded that there was no
impact to the Groups consolidated financial statements upon the adoption of IFRS 10.

Impact of the application of
IFRS 12

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint
arrangements, associates and/or unconsolidated structured entities. In general, the application of IFRS 12 has resulted in more extensive disclosures in the consolidated financial statements.

IFRS 13 Fair Value Measurement

The Group has applied IFRS 13 for the first time in the current year. IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope
of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value
measurements, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are
not fair value (e.g. net realizable value for the purposes of measuring inventories or value in use for impairment assessment purposes). IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using
another valuation technique. Also, IFRS 13 includes extensive disclosure requirements.

IFRS 13 requires prospective
application from annual period began on or after 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information
provided for periods before the initial application of the Standard. In accordance with these transitional provisions, the Group has not made any new disclosures required by IFRS 13 for the comparative periods. Other than the additional disclosures,
the application of IFRS 13 has not had any material impact on the amounts recognized in the consolidated financial statements.

The Group has not early adopted the following new and revised standards, amendments or interpretations that have been issued but are not
yet effective.



|                                          |  |                                                                      
|----------------------------------------- |  | ---------------------------------------------------------------------
|Amendments to IFRS 10, IFRS 12 and IAS 27 |  | Investment Entities1                                                 
|Amendments to IFRS 11                     |  | Accounting for Acquisitions of Interests in Joint Operations6        
|Amendments to IAS 16 and IAS 38           |  | Clarification of Acceptable Methods of Depreciation and Amortisation6
|Amendments to IAS 19                      |  | Defined Benefit Plans: Employee
Contributions2                       
|Amendments to IFRS 9 and IFRS 7           |  | Mandatory Effective Date of IFRS 9 and Transition Disclosures3       
|Amendments to IAS 32                      |  | Offsetting Financial Assets and Financial
Liabilities1               
|Amendments to IAS 36                      |  | Recoverable Amount Disclosures for Non-Financial
Assets1             
|Amendments to IAS 39                      |  | Novation of Derivatives and Continuation of Hedge Accounting1        
|Amendments to IFRSs                       |  | Annual Improvements to IFRSs 2010-2012
Cycle4                        
|Amendments to IFRSs                       |  | Annual Improvements to IFRSs 2011-2013
Cycle2                        
|Amendments to IAS 16 and IAS 41           |  | Agriculture: Bearer Plants6                                          



F-20



---

##### Table of Contents

|         |  |                                       
|-------- |  | --------------------------------------
|IFRS 9   |  | Financial Instruments3                
|IFRS 14  |  | Regulatory Deferral Accounts5         
|IFRS 15  |  | Revenue from Contracts with Customers7
|IFRIC 21 |  | Levies1                               



|1 | Effective for
annual periods beginning on or after 1 January 2014
|- | -----------------------------------------------------------------

|2 | Effective for
annual periods beginning on or after 1 July 2014
|- | --------------------------------------------------------------

|3 | Available for
application - the mandatory effective date will be determined when the outstanding phases of IFRS 9 are finalised
|- | -------------------------------------------------------------------------------------------------------------------------------

|4 | Effective for
annual periods beginning on or after 1 July 2014, with limited exceptions
|- | ---------------------------------------------------------------------------------------

|5 | Effective for
first annual IFRS financial statements beginning on or after 1 January 2016
|- | -----------------------------------------------------------------------------------------

|6 | Effective for
annual periods beginning on or after 1 January 2016
|- | -----------------------------------------------------------------

|7 | Effective for
annual periods beginning on or after 1 January 2017
|- | -----------------------------------------------------------------

Annual Improvements to IFRSs 2010 - 2012
Cycle

The Annual Improvements to IFRSs 2010 - 2012 Cycle include a number of amendments to various IFRSs, in which the
relevant amendments are summarized below.

The amendments to IFRS 2 (i) change the definitions of vesting
condition and market condition; and (ii) add definitions for performance condition and service condition which were previously included within the definition of vesting condition. The
amendments to IFRS 2 are effective for share-based payment transactions for which the grant date is on or after July 1, 2014.

The amendments to the basis for conclusions of IFRS 13 clarify that the issue of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short- term receivables and
payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial.

The directors of the Company anticipate that the application of the amendments included in the Annual Improvements to IFRSs
2010  2012 Cyclewill have no material impact on the consolidated financial statements.

IFRS 9
Financial Instruments

IFRS 9 issued in 2009 introduces new requirements for the classification and measurement of
financial assets. IFRS 9 was subsequently amended in 2010 to include the requirements for the classification and measurement of financial liabilities and for derecognition, and further amended in 2013 to include the new requirements for hedge
accounting.

Key requirements of IFRS 9 are described as follows:



| |  |  | All recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurementare subsequently measured
at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest
on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent reporting periods. In
addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in
profit or loss.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change
in the fair value of the financial liability, that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liabilitys credit risk in
other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value of financial liabilities attributable to change in the financial liabilities credit risk are not subsequently reclassified to
profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-21



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##### Table of Contents

Based on the Groups financial assets and financial liabilities as at March 31,
2014, the directors anticipate that the adoption of IFRS 9 in the future will affect the classification and measurement of the Groups available-for-sale investments and is not likely to have significant impact on the amounts of the
Groups other financial assets and financial liabilities. Regarding the Groups available-for-sale investments, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

The directors anticipate that the application of the other new and revised IFRSs will have no material impact on the consolidated
financial statements.



|4. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
|-- | ------------------------------------------------------------------------

In the application of the Groups accounting policies, which are described in note 2, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates and assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period
in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgments in applying the entitys accounting policies

The following are the critical judgments that the directors have made in the process of applying the entitys accounting policies and
that have the most significant effect in the amounts recognized in financial statements.

Contractual arrangements with SPEs

The Group believes that its contractual arrangements with Sky, Mijia, Fanyi, Feineng, Sky Investment, Miyi, Najia,
Tianchu, Zunqi, Geyuan, Kaimi and Dangyi are in compliance with PRC law and are legally enforceable. The shareholders of the consolidated SPEs are also shareholders or senior managements of the Group and therefore the Group believes that under most
circumstances they have no current interest in seeking to act contrary to the contractual arrangements. However, the consolidated SPEs and their shareholders may fail to take certain actions required for the Groups business or to follow the
Groups instructions despite their contractual obligations to do so. Furthermore, if the SPEs or their shareholders do not act in the best interests of the Group under the contractual arrangements and any dispute relating to these contractual
arrangements remains unresolved, the Group will have to enforce its rights under these contractual arrangements through the operations of PRC law and courts and therefore will be subject to uncertainties in the PRC legal system. All of these
contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance
with PRC legal procedures. As a result, uncertainties in the PRC legal system could limit the Groups ability to enforce these contractual arrangements, which may make it difficult to exert effective control over the Groups consolidated
SPEs, and its ability to conduct the Groups business may be adversely affected.

If the legal structure and contractual
arrangements were found to be in violation of PRC laws and regulations, the PRC government could:



| |  |  | Revoke the business and operating licenses of the PRC holding entities, SPEs and their subsidiaries;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | Discontinue or restrict the operations of any related-party transactions among the PRC holding entities, SPEs and their
subsidiaries;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Impose fines or other requirements on the PRC holding entities, SPEs and their subsidiaries;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | Require the Company or PRC holding entities, SPEs and their subsidiaries to revise the relevant ownership structure or restructure operations; and/or
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restrict or prohibit the Companys use of the proceeds of the additional public offering to finance the Groups business and operations in
China.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------

The Companys ability to conduct its business may be negatively affected if the PRC government
were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate the SPEs in its consolidated financial statements as it may lose the ability to exert effective control over the SPEs and their
shareholders, and it may lose the ability to receive economic benefits from the SPEs.



F-22



---

##### Table of Contents

Certain equity holders of the SPEs are also shareholders of the Company. The interests of
the equity holders of the SPEs may diverge from shareholders of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms, for example by influencing the SPEs not to pay the service fees
when required to do so. The Company cannot assure that when conflicts of interest arise, equity holders of the SPEs will act in the best interests of the Company or that conflicts of interests will be resolved in the Companys favor. Currently,
the Company does not have existing arrangements to address potential conflicts of interest the equity holders of the SPEs may encounter in their capacity as beneficial owners and directors of the SPEs. The Company believes the equity holders of the
SPEs will not act contrary to any of the contractual arrangements which provide the Company with a mechanism to remove the current equity holders of the SPEs as beneficial shareholders of the SPEs should they act to the detriment of the Company. The
Company relies on the current equity holders of SPEs, as directors and executive officers of the Company, to fulfill their fiduciary duties and abide by laws of the PRC and Cayman Islands and act in the best interest of the Company. If the Company
cannot resolve any conflicts of interest or disputes between the Company and the equity holders of the SPEs, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty
as to the outcome of any such legal proceedings.

The Companys ability to control the SPEs also depends on the power of
attorney that the PRC holding entities have to vote on all matters requiring shareholder approval in the SPEs. As noted above, the Company believes this power of attorney is legally enforceable but may not be as effective as direct equity ownership.

The following is the summarized financial information of the Groups SPEs which was included in the Companys
consolidated financial statements:



|                                      |  |                               |          |   |         |  |         |         |  |  |         |  
|------------------------------------- |  | ----------------------------- | -------- | - | ------- |  | ------- | ------- |  |  | ------- | -
|                                      |  | At March 31,                  |         
|                                      |  | 2012                          |          |   | 2013    |  |         | 2014    | 
|                                      |  | RMB000                       |          |   | RMB000 |  |         | RMB000 | 
|                                      |  |                               |         
|Total current assets                  |  |                               | 391,235  |   |         |  | 442,741 |         |  |  | 463,224 |  
|Total assets                          |  |                               | 458,316  |   |         |  | 516,174 |         |  |  | 585,490 |  
|                                      |  |                               |          |   |         |  |         |         |  |  |         |  
|                                      |  |                               |         
|Total current liabilities             |  |                               | 93,764   |   |         |  | 128,594 |         |  |  | 121,174 |  
|Total liabilities                     |  |                               | 93,764   |   |         |  | 128,594 |         |  |  | 121,174 |  
|                                      |  |                               |          |   |         |  |         |         |  |  |         |  
|                                      | 
|                                      |  | For the years ended March 31, |         
|                                      |  | 2012                          |          |   | 2013    |  |         | 2014    | 
|                                      |  | RMB000                       |          |   | RMB000 |  |         | RMB000 | 
|                                      |  |                               |         
|Revenues                              |  |                               | 679,502  |   |         |  | 576,060 |         |  |  | 444,709 |  
|Net income                            |  |                               | 27,829   |   |         |  | 13,538  |         |  |  | 5,198   |  
|                                      |  |                               |          |   |         |  |         |         |  |  |         |  
|                                      |  |                               |         
|Net cash from operating activities    |  |                               | 49,174   |   |         |  | 75,943  |         |  |  | 50,690  |  
|Net cash used in investing activities |  |                               | (106,935 | ) |         |  | (92,265 | )       |  |  | (73,607 | )
|Net cash from financing activities    |  |                               |         |   |         |  |        |         |  |  | (69     | )
|                                      |  |                               |          |   |         |  |         |         |  |  |         |  

The SPEs contributed an aggregate of 99.1%, 95.8% and 91.6% of the consolidated revenues for the years
ended March 31, 2012, 2013 and 2014, respectively. The Companys operations not conducted through contractual arrangements with the SPEs primarily consist of its overseas and promotion business. As of March 31, 2012, 2013 and 2014,
the SPEs accounted for an aggregate of 63.8%, 69.6% and 74.5%, respectively, of the consolidated total assets, and 67.7%, 91.8% and 66.7%, respectively, of the consolidated total liabilities. The assets not associated with the SPEs primarily consist
of the cash and cash equivalents held by the offshore companies and PRC holding entities.



F-23



---

##### Table of Contents

Key sources of estimation uncertainty

Following are the key assumptions and other key sources of estimation uncertainty at the end of the reporting period that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Maopao
Community Revenues

Maopao Community revenues are derived from the purchase of in-game virtual items having an unlimited
life. Such revenues are initially deferred and are subsequently recognized following the historical user retention pattern over the estimated consumption period of the durable virtual items, ranging from one to 12 months. The user retention pattern
and consumption period are estimated based on the historical data and log-in patterns of paying users, including the average period paying users typically stay active in the Maopao Community. Future paying user usage patterns and behavior may differ
from the historical usage patterns and therefore the estimated average playing periods are assessed at the end of each reporting period and may change in the future.

Recognition of deferred tax assets

As at March 31, 2012, 2013 and
2014, the carrying amount of deferred tax assets of the Group are approximately RMB2,210,000, RMB1,765,000 and RMB1,968,000, respectively. No deferred tax asset has been recognized in respect of tax losses of RMB37,998,000, RMB37,008,000 and
RMB42,433,000 as at March 31, 2012, 2013 and 2014 due to the unpredictability of future profit streams. The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient taxable profit will be available in
the future, against which the reversal of temporary differences can be deducted. Recognition, therefore, involves judgment regarding the future financial performance of the particular legal entity or tax group in which the deferred tax asset has
been recognized. In cases where the actual future profits generated are less or more than expected, a material reversal or recognition of deferred tax assets may arise, which would be recognized in profit or loss for the period in which such a
reversal or recognition takes place.



|5. | FINANCIAL INSTRUMENTS
|-- | ---------------------

Capital risk management

The primary objective of the Groups capital management is to safeguard the Groups ability to continue as a going concern, so that it can provide an adequate return to shareholders by pricing
its services commensurately with the level of risk. The Groups overall strategy remains unchanged during the reporting periods.

The capital structure of the Group consists of equity attributable to owners of the Company, which includes share capital and reserves.

The Group reviews the capital structure regularly and considers the cost of capital and the risks associated with each class of capital
and, to the extent necessary, balances its overall capital structure through the repurchase of share and issuance of new shares.

Categories of financial instruments

The carrying amounts of
financial assets and financial liabilities are as follows:



|                               |  |              |         |  |         |  |         |         |  |  |         | 
|------------------------------ |  | ------------ | ------- |  | ------- |  | ------- | ------- |  |  | ------- | 
|                               |  | At March 31, |        
|                               |  | 2012         |         |  | 2013    |  |         | 2014    | 
|                               |  | RMB000      |         |  | RMB000 |  |         | RMB000 | 
|                               |  |              |        
|Financial assets               |  |              |         |  |         |  |         |         |  |  |         | 
|Amortized cost                 |  |              | 673,046 |  |         |  | 685,824 |         |  |  | 515,719 | 
|                               |  |              |         |  |         |  |         |         |  |  |         | 
|Available-for-sale investments |  |              | 900     |  |         |  | 7,167   |         |  |  | 6,250   | 
|                               |  |              |         |  |         |  |         |         |  |  |         | 
|Investment at FVTPL            |  |              |        |  |         |  |        |         |  |  | 166,073 | 
|                               |  |              |         |  |         |  |         |         |  |  |         | 
|                               |  |              |        
|Financial liabilities          |  |              |         |  |         |  |         |         |  |  |         | 
|Amortized cost                 |  |              | 76,905  |  |         |  | 82,289  |         |  |  | 117,692 | 
|                               |  |              |         |  |         |  |         |         |  |  |         | 



F-24



---

##### Table of Contents

Financial risk management objectives and policies

Foreign currency risk management

The Group mainly operates in the PRC with most of its transactions settled in RMB. The foreign currency risk is mainly attributable to the Groups U.S. dollar (US$) bank account
balances. The carrying amount of the US$ bank account balances was approximately RMB89,465,000 and RMB87,220,000 and RMB88,327,000 as of March 31, 2012, 2013 and 2014, respectively. The Group has not used any forward contracts, currency
borrowings or other means to hedge its foreign currency risk exposure.

If the RMB exchange rate against the US$ had
strengthened or weakened by 5% with all other variables held constant, the carrying value of bank accounts denominated in US$ would have decreased or increased by RMB4,473,000, RMB4,361,000 and RMB4,416,000 as of March 31, 2012, 2013 and 2014,
respectively, with a corresponding decrease or increase in net profit for the respective years. The sensitivity analysis only details the Groups sensitivity to a 5% appreciation and depreciation in RMB, against the foreign currency, US$. The
5% figure is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents managements assessment of the reasonably possible change in foreign exchange rate.

Interest rate risk management

The Group has exposure to cash flow interest rate risk due to the fluctuation of the variable interest rates associated with its cash and cash equivalents which are based on prevailing market interest
rates. Currently, the Group does not have a specific policy to manage their interest rate risk. The Group does not have significant exposure to cash flow interest rate risk as at March 31, 2012, 2013 and 2014 as the interest rates have not
fluctuated significantly in recent years.

Credit risk management

The Groups maximum exposure to credit risks is equivalent to the total carrying amount of trade and other receivables, amounts due
from related parties, cash and cash equivalents, short-term investments, term deposits, available-for-sale investments and investments at FVTPL of RMB673,946,000, RMB692,991,000 and RMB688,042,000 as of March 31, 2012, 2013 and 2014,
respectively.

Collection of the Groups revenues is substantially done through mobile service providers with whom the
Group has co-operative service agreements. The total carrying amount of trade receivables from mobile service providers was RMB81,681,000, RMB36,828,000 and RMB22,302,000, respectively, as of March 31, 2012, 2013 and 2014. The Group also had
RMB7,157,000, RMB28,196,000 and RMB38,669,000 trade receivables from mobile network operators as of March 31, 2012, 2013 and 2014, respectively, and the credit risk of these receivables were very low. In order to minimize the credit risk of
trade receivables from mobile service providers, the Group assesses the credit worthiness of the mobile service providers prior to contracting with them. In addition, the Group selects mobile service providers based on their payment history and the
assessment of their relationship with the mobile network operators which will impact the mobile service providers ability to pay. The Group further monitors the subsequent performance of the mobile service providers in order to mitigate
collection risk going forward. In addition, the Group reviews the recoverable amount of each individual trade receivable at the end of each reporting period to determine if provision should be made for uncollectible amounts.

The Group has concentration of credit risks with exposure limited to certain mobile service providers and mobile network operators. As at
March 31, 2012, 2013 and 2014, ten mobile service providers or mobile network operators accounted for approximately RMB64,812,000, RMB51,892,000 and RMB47,361,000, or 73%, 80% and 78% of the Groups trade receivables, respectively. The
Group closely monitors the subsequent settlement of trade receivables and does not grant long credit periods to the counterparties.

The Groups cash and cash equivalents, term deposits and short investments are held by large banks established in the PRC and Hong Kong Special Administrative Region. The Groups
available-for-sale investments are mainly a limited partnership interest in a private equity fund, and the investment at FVTPL are managed by a state owned fund company. The Group does not expect any losses arising from non-performance of these
financial institutions.

Liquidity risk

The Group monitors and attempts to maintain a level of cash and cash equivalents adequate to finance the Groups operations and mitigate the effects of fluctuations in cash flows.

The following tables present the maturities of the Groups financial liabilities based upon the undiscounted cash flows of financial
liabilities assuming payment on the earliest date on which the Group can be required to pay. The table includes both interest, if any, and principal cash flows.



F-25



---

##### Table of Contents

|                               |  |                              |         |  |                                                |  |         | 
|------------------------------ |  | ---------------------------- | ------- |  | ---------------------------------------------- |  | ------- | 
|                               |  | On demand orless than1 month |         |  | Total undiscountedcash flow andcarrying amount | 
|                               |  | RMB000                      |         |  | RMB000                                        | 
|                               |  |                             
|March 31, 2012                 |  |                              |         |  |                                                |  |         | 
|Trade and other payables       |  |                              | 76,034  |  |                                                |  | 76,034  | 
|Amounts due to related parties |  |                              | 871     |  |                                                |  | 871     | 
|                               |  |                              |         |  |                                                |  |         | 
|                               |  |                              | 76,905  |  |                                                |  | 76,905  | 
|                               |  |                              |         |  |                                                |  |         | 
|March 31, 2013                 |  |                              |         |  |                                                |  |         | 
|Trade and other payables       |  |                              | 78,235  |  |                                                |  | 78,235  | 
|Amounts due to related parties |  |                              | 4,054   |  |                                                |  | 4,054   | 
|                               |  |                              |         |  |                                                |  |         | 
|                               |  |                              | 82,289  |  |                                                |  | 82,289  | 
|                               |  |                              |         |  |                                                |  |         | 
|March 31, 2014                 |  |                              |         |  |                                                |  |         | 
|Trade and other payables       |  |                              | 106,491 |  |                                                |  | 106,491 | 
|Amounts due to related parties |  |                              | 11,201  |  |                                                |  | 11,201  | 
|                               |  |                              |         |  |                                                |  |         | 
|                               |  |                              | 117,692 |  |                                                |  | 117,692 | 
|                               |  |                              |         |  |                                                |  |         | 

Fair value

(i) Fair value of the Groups financial assets that are measured at fair value on a recurring basis

Some of the Groups financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are
determined (in particular, the valuation technique and inputs used.



|                    |  |                                |  |                      |  |                                                                                                                                   
|------------------- |  | ------------------------------ |  | -------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------
|Financial assets    |  | Fair value as at March 31,2014 |  | Fair value hierarchy |  | Valuation technique and key inputs                                                                                                
|                    |  |                                | 
|Investment at FVTPL |  | 166,073,000                    |  | Level 2              |  | Discounted cash flow. Future cash flows are based on expected return and credit risks of investments underlying the monetary fund.

The carrying amounts of all financial assets (except for the AFS equity investments and investment at
FVTPL) and financial liabilities as at March 31, 2012, 2013 and 2014 are recorded at amortized cost, using the effective interest method unless the effect of discounting is not material, in which case, they are carried at cost. Such amounts
approximate their fair value.



|6. | REVENUES AND SEGMENT INFORMATION
|-- | --------------------------------



|                           |  |                       |         |  |         |  |         |         |  |  |         | 
|-------------------------- |  | --------------------- | ------- |  | ------- |  | ------- | ------- |  |  | ------- | 
|                           |  | Years Ended March 31, |        
|                           |  | 2012                  |         |  | 2013    |  |         | 2014    | 
|                           |  | RMB000               |         |  | RMB000 |  |         | RMB000 | 
|Application store revenues |  |                       | 546,117 |  |         |  | 381,573 |         |  |  | 272,300 | 
|Maopao Community revenues  |  |                       | 110,536 |  |         |  | 177,658 |         |  |  | 144,015 | 
|Other revenues             |  |                       | 28,910  |  |         |  | 41,876  |         |  |  | 69,236  | 
|                           |  |                       |         |  |         |  |         |         |  |  |         | 
|Total                      |  |                       | 685,563 |  |         |  | 601,107 |         |  |  | 485,551 | 
|                           |  |                       |         |  |         |  |         |         |  |  |         | 



F-26



---

##### Table of Contents

Segment information

The Group operates and manages its business as a single segment. The Groups chief operating decision maker has been identified as the Chief Executive Officer, who reviews the revenue analysis by
application store revenues, Maopao Community revenue through K currency and other revenues and the profit from operation of the Group as a whole when making decisions about allocating resources and assessing performance of the Group.

Geographical information

All of the Groups non-current assets are located in the PRC. Revenues are primarily derived from the PRC, with minimal revenues derived from Indonesia and other countries. The following table sets
forth revenues by geographic area:



|        |  |                       |         |  |         |  |         |         |  |  |         | 
|------- |  | --------------------- | ------- |  | ------- |  | ------- | ------- |  |  | ------- | 
|        |  | Years Ended March 31, |        
|        |  | 2012                  |         |  | 2013    |  |         | 2014    | 
|        |  | RMB000               |         |  | RMB000 |  |         | RMB000 | 
|        |  |                       |        
|PRC     |  |                       | 672,195 |  |         |  | 581,442 |         |  |  | 466,778 | 
|Non-PRC |  |                       | 13,368  |  |         |  | 19,665  |         |  |  | 18,773  | 
|        |  |                       |         |  |         |  |         |         |  |  |         | 
|Total   |  |                       | 685,563 |  |         |  | 601,107 |         |  |  | 485,551 | 
|        |  |                       |         |  |         |  |         |         |  |  |         | 

Information about major customers

During the years ended March 31, 2012, 2013 and 2014, there was no customer that individually accounted for over 10% of the Groups total revenue.



|7. | OTHER OPERATING INCOME, NET
|-- | ---------------------------



|                                      |  |                       |       |   |         |  |       |         |  |  |       |  
|------------------------------------- |  | --------------------- | ----- | - | ------- |  | ----- | ------- |  |  | ----- | -
|                                      |  | Years Ended March 31, |      
|                                      |  | 2012                  |       |   | 2013    |  |       | 2014    | 
|                                      |  | RMB000               |       |   | RMB000 |  |       | RMB000 | 
|                                      |  |                       |      
|Government grant                      |  |                       | 2,091 |   |         |  | 2,931 |         |  |  | 4,030 |  
|Gain on derecognition of a subsidiary |  |                       | 1,930 |   |         |  |      |         |  |  |      |  
|Reimbursement from depository bank    |  |                       |      |   |         |  |      |         |  |  | 1,922 |  
|Others                                |  |                       | (346  | ) |         |  | (611  | )       |  |  | (180  | )
|                                      |  |                       |       |   |         |  |       |         |  |  |       |  
|Total                                 |  |                       | 3,675 |   |         |  | 2,320 |         |  |  | 5,772 |  
|                                      |  |                       |       |   |         |  |       |         |  |  |       |  



|8. | OTHER GAINS AND LOSSES
|-- | ----------------------



|                                            |  |                       |        |   |         |  |        |         |  |  |        |  
|------------------------------------------- |  | --------------------- | ------ | - | ------- |  | ------ | ------- |  |  | ------ | -
|                                            |  | Years Ended March 31, |       
|                                            |  | 2012                  |        |   | 2013    |  |        | 2014    | 
|                                            |  | RMB000               |        |   | RMB000 |  |        | RMB000 | 
|                                            |  |                       |       
|Interest income                             |  |                       | 12,110 |   |         |  | 16,209 |         |  |  | 15,913 |  
|Income on short-term investments            |  |                       |       |   |         |  |       |         |  |  | 2,569  |  
|Change in fair value of investment at FVTPL |  |                       |       |   |         |  |       |         |  |  | 1,073  |  
|Income on loan receivable                   |  |                       | 450    |   |         |  |       |         |  |  |       |  
|Exchange loss                               |  |                       | (3,266 | ) |         |  | (429   | )       |  |  | (2,061 | )
|Others                                      |  |                       | 2,355  |   |         |  | (249   | )       |  |  | (12    | )
|                                            |  |                       |        |   |         |  |        |         |  |  |        |  
|Total                                       |  |                       | 11,649 |   |         |  | 15,531 |         |  |  | 17,482 |  
|                                            |  |                       |        |   |         |  |        |         |  |  |        |  



F-27



---

##### Table of Contents

|9. | PROFIT BEFORE TAX
|-- | -----------------



|                                                      |  |                       |         |  |         |  |         |         |  |  |        |  
|----------------------------------------------------- |  | --------------------- | ------- |  | ------- |  | ------- | ------- |  |  | ------ | -
|                                                      |  | Years Ended March 31, |        
|                                                      |  | 2012                  |         |  | 2013    |  |         | 2014    | 
|                                                      |  | RMB000               |         |  | RMB000 |  |         | RMB000 | 
|                                                      |  |                       |        
|Profit before tax has been arrived at after charging: |  |                       |         |  |         |  |         |         |  |  |        |  
|Staff salary and other benefits                       |  |                       | 112,416 |  |         |  | 100,106 |         |  |  | 74,147 |  
|Retirement benefit scheme contributions               |  |                       | 1,843   |  |         |  | 2,095   |         |  |  | 1,668  |  
|Share-based compensation (Note 22)                    |  |                       | 45,683  |  |         |  | 24,457  |         |  |  | 17,478 |  
|                                                      |  |                       |         |  |         |  |         |         |  |  |        |  
|Total staff costs                                     |  |                       | 159,942 |  |         |  | 126,658 |         |  |  | 93,293 |  
|                                                      |  |                       |         |  |         |  |         |         |  |  |        |  
|Depreciation of property and equipment                |  |                       | 21,082  |  |         |  | 21,596  |         |  |  | 8,654  |  
|Loss (gain) on disposal of property and equipment     |  |                       |        |  |         |  | 68      |         |  |  | (208   | )
|Operating lease rentals in respect of rented premises |  |                       | 8,582   |  |         |  | 10,192  |         |  |  | 9,273  |  
|Operating lease rentals in respect of rented servers  |  |                       | 9,068   |  |         |  | 9,523   |         |  |  | 9,904  |  
|Bad debt written off (reversal)                       |  |                       | 2,361   |  |         |  | 3,693   |         |  |  | (541   | )



|10. | INCOME TAX
|--- | ----------

Cayman
Islands

Under the current laws of the Cayman Islands, the Company is not subject to income tax.

PRC

On January 1, 2008, a new Enterprise Income Tax Law (the New EIT Law) in China took effect. The New EIT Law applies a uniform 25% enterprise income tax rate to both foreign invested and
domestic enterprises.

In 2007, Sky was granted the status of Software Enterprise under the PRC tax laws that entitled it to a
preferential Enterprise Income Tax (EIT) rate of two-year EIT exemption from its first year of profitable operation, after offsetting prior years tax losses, and a 50% reduction of its applicable EIT rate for the succeeding three
years. On April 24, 2009, the PRC government promulgated the Notice on Several Issues Relevant to the Implementation of the Preferential Policies on EIT which allows Software Enterprises to continue to enjoy their unexpired tax holiday under
the old EIT Law. The first profit-making year of Sky was 2008. As a result, Sky was subject to a tax rate of 12.5% for calendar year 2011 and 2012. In 2011, Sky obtained the high and new technology enterprise (HNTE) status
under the New EIT Law. The HNTE status allows qualifying China-based enterprises to use a 15% tax rate for three years. As a result, Sky was subject to a tax rate of 15% for calendar year 2013. In 2014, the application of renewing HNTE status is in
process.

In 2009, Mijia was granted the status of Software Enterprise under the PRC tax laws that entitled it to a
preferential EIT rate of two-year EIT exemption from its first year of profitable operation, after offsetting prior years tax losses, and a 50% reduction of its applicable EIT rate for the succeeding three years. The first profit-making year
of Mijia was 2010. As a result, Mijias EIT rates are 12.5% for calendar year 2012, 2013 and 2014, respectively.

In
2013, Miyi and Najia were granted the status of Software Enterprise under the PRC tax laws, respectively, that entitled them to a preferential EIT rate of two-year EIT exemption from their first year of profitable operation, after offsetting prior
years tax losses, and a 50% reduction of their applicable EIT rate for the succeeding three years. The first profit-making year of Miyi and Najia was 2013. As a result, Mijia and Najias EIT rates are 0% for calendar year 2013 and 2014,
respectively.



|                              |  |                       |       |   |         |  |       |         |  |  |       |  
|----------------------------- |  | --------------------- | ----- | - | ------- |  | ----- | ------- |  |  | ----- | -
|                              |  | Years Ended March 31, |      
|                              |  | 2012                  |       |   | 2013    |  |       | 2014    | 
|                              |  | RMB000               |       |   | RMB000 |  |       | RMB000 | 
|Current tax expense:          |  |                       |       |   |         |  |       |         |  |  |       |  
|PRC enterprise income tax     |  |                       |      |   |         |  | 2,288 |         |  |  | 7,421 |  
|Over provision in prior years |  |                       | (844  | ) |         |  |      |         |  |  |      |  
|Deferred tax                  |  |                       | 4,446 |   |         |  | 445   |         |  |  | (203  | )
|                              |  |                       |       |   |         |  |       |         |  |  |       |  
|Total                         |  |                       | 3,602 |   |         |  | 2,733 |         |  |  | 7,218 |  
|                              |  |                       |       |   |         |  |       |         |  |  |       |  



F-28



---

##### Table of Contents

The tax expense can be reconciled to the profit per the consolidated statements of profit or
loss and other comprehensive income as follows:



|                                                                                                   |  |                       |         |   |         |  |        |         |  |  |        |  
|-------------------------------------------------------------------------------------------------- |  | --------------------- | ------- | - | ------- |  | ------ | ------- |  |  | ------ | -
|                                                                                                   |  | Years Ended March 31, |        
|                                                                                                   |  | 2012                  |         |   | 2013    |  |        | 2014    | 
|                                                                                                   |  | RMB000               |         |   | RMB000 |  |        | RMB000 | 
|Profit before tax                                                                                  |  |                       | 36,531  |   |         |  | 19,989 |         |  |  | 11,875 |  
|                                                                                                   |  |                       |         |   |         |  |        |         |  |  |        |  
|Income tax expense at PRC tax rate of 25% (i)                                                      |  |                       | 9,133   |   |         |  | 4,997  |         |  |  | 2,969  |  
|Tax effect of:                                                                                     |  |                       |         |   |         |  |        |         |  |  |        |  
|Non-deductible share-based compensation                                                            |  |                       | 11,421  |   |         |  | 6,114  |         |  |  | 4,370  |  
|Other non-deductible expenses                                                                      |  |                       | 1,640   |   |         |  | 1,957  |         |  |  | 309    |  
|Tax incentives relating to research and development expenditures                                   |  |                       | (2,898  | ) |         |  | (6,470 | )       |  |  | (4,888 | )
|Tax exemption and concession to PRC subsidiaries                                                   |  |                       | (14,897 | ) |         |  | (2,747 | )       |  |  | (2,608 | )
|Tax effect of deferred tax assets not recognized from deductible temporary differences             |  |                       | (2,037  | ) |         |  | (831   | )       |  |  | 374    |  
|Tax effect of utilization of tax loss not recognized previously and unused tax loss not recognized |  |                       | 2,084   |   |         |  | (247   | )       |  |  | 1,442  |  
|Tax effect of inter-group transfer of an associate (ii)                                            |  |                       |        |   |         |  |       |         |  |  | 5,250  |  
|Others                                                                                             |  |                       | (844    | ) |         |  | (40    | )       |  |  |       |  
|                                                                                                   |  |                       |         |   |         |  |        |         |  |  |        |  
|Tax expense for the year                                                                           |  |                       | 3,602   |   |         |  | 2,733  |         |  |  | 7,218  |  
|                                                                                                   |  |                       |         |   |         |  |        |         |  |  |        |  



|(i) | The applicable PRC statutory income tax rate is used since the Groups taxable income is generated in the PRC. The applicable PRC income tax rate of 25% was used
in the above computation for all reporting periods.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | Due to the Groups change of investment strategy, an equity investment was transferred from Sky Investment with 25% EIT rate to Miyi with 0% EIT tax rate during
year ended March 31, 2014. Income tax of RMB 5,250,000 calculated based on the transferred price was accrued and paid to the relevant tax bureau in April, 2014 accordingly.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Without tax exemption and tax concession, PRC enterprise income taxes would have increased and basic and diluted earnings per share would
have decreased by the following amounts:



|                                                 |  |                       |         |  |         |  |         |         |  |  |         |  
|------------------------------------------------ |  | --------------------- | ------- |  | ------- |  | ------- | ------- |  |  | ------- | -
|                                                 |  | Years Ended March 31, |        
|                                                 |  | 2012                  |         |  | 2013    |  |         | 2014    | 
|                                                 |  | RMB000               |         |  | RMB000 |  |         | RMB000 | 
|Increase in PRC income tax                       |  |                       | 14,897  |  |         |  | 2,747   |         |  |  | 2,608   |  
|                                                 |  |                       |         |  |         |  |         |         |  |  |         |  
|Increase (decrease) in deferred tax              |  |                       | 5,042   |  |         |  | 445     |         |  |  | (93     | )
|                                                 |  |                       |         |  |         |  |         |         |  |  |         |  
|Decrease in basic and diluted earnings per share |  |                       | RMB0.08 |  |         |  | RMB0.01 |         |  |  | RMB0.01 |  
|                                                 |  |                       |         |  |         |  |         |         |  |  |         |  

As of March 31, 2012, 2013 and 2014, the Group has unused tax losses of RMB37,998,000, RMB37,008,000
and RMB42,433,000 available for offset against future profits that may be carried forward until calendar year 2018. No deferred tax asset has been recognized in respect of the tax losses due to the unpredictability of future profit streams.

The following table reflects the movements in deferred tax assets:



|                                         |  |                 |        |  
|---------------------------------------- |  | --------------- | ------ | -
|                                         |  | Accruedexpenses |       
|                                         |  | RMB000         |       
|Balance at April 1, 2011                 |  |                 | 6,656  |  
|Charge to profit or loss during the year |  |                 | (4,446 | )
|                                         |  |                 |        |  
|Balance at March 31, 2012                |  |                 | 2,210  |  
|Charge to profit or loss during the year |  |                 | (445   | )
|                                         |  |                 |        |  
|Balance at March 31, 2013                |  |                 | 1,765  |  
|Credit to profit or loss during the year |  |                 | 203    |  
|                                         |  |                 |        |  
|Balance at March 31, 2014                |  |                 | 1,968  |  
|                                         |  |                 |        |  



F-29



---

##### Table of Contents

The Group declared dividends in March 2010 and May 2010, however, the Group has no plan to
declare dividends in the foreseeable future. There were undistributed earnings of the subsidiaries and consolidated SPEs of approximately RMB230,009,000, RMB240,163,000 and RMB267,622,000 at March 31, 2012, 2013 and 2014, respectively. As at
March 31, 2012, 2013 and 2014, deferred tax liability has not been provided on the remaining undistributed earnings as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary
difference will not reverse in the foreseeable future.



|11. | EARNINGS PER SHARE
|--- | ------------------

Holders of the Groups Restricted Shares (Note 22) are entitled to participate in dividends on an equal basis with holders
of the Groups unrestricted common shares. As such dividends are not subject to restriction as to use, the Restricted Shares are considered participating and basic earnings per share has been computed using the two-class method as follows:



|                                                                        |  |                       |             |   |      |  |             |      |  |  |             |  
|----------------------------------------------------------------------- |  | --------------------- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | -
|                                                                        |  | Years Ended March 31, |            
|                                                                        |  | 2012                  |             |   | 2013 |  |             | 2014 | 
|Profit for the year attributable to the owners of the Company (RMB000) |  |                       | 32,969      |   |      |  | 17,112      |      |  |  | 5,251       |  
|Less: amount allocated to restricted shares (RMB000)                   |  |                       | (602        | ) |      |  | (221        | )    |  |  | (54         | )
|                                                                        |  |                       |             |   |      |  |             |      |  |  |             |  
|Profit for the year for the purpose of diluted earnings per share       |  |                       | 32,367      |   |      |  | 16,891      |      |  |  | 5,197       |  
|                                                                        |  |                       |             |   |      |  |             |      |  |  |             |  
|Weighted average common shares outstanding - basic                      |  |                       | 257,428,502 |   |      |  | 255,983,883 |      |  |  | 244,460,993 |  
|Share options                                                           |  |                       | 841,857     |   |      |  |            |      |  |  | 1,068,459   |  
|                                                                        |  |                       |             |   |      |  |             |      |  |  |             |  
|Weighted average common shares outstanding - diluted                    |  |                       | 258,270,359 |   |      |  | 255,983,883 |      |  |  | 245,529,453 |  
|                                                                        |  |                       |             |   |      |  |             |      |  |  |             |  
|Basic earnings per share                                                |  |                       | 0.13        |   |      |  | 0.07        |      |  |  | 0.02        |  
|                                                                        |  |                       |             |   |      |  |             |      |  |  |             |  
|Diluted earnings per share                                              |  |                       | 0.13        |   |      |  | 0.07        |      |  |  | 0.02        |  
|                                                                        |  |                       |             |   |      |  |             |      |  |  |             |  

The computation of diluted earnings per share for the year ended March 31, 2013 does not assume the
exercise of the Companys options because the exercise price of those options was higher than the average market price for shares.



|12. | DIVIDENDS
|--- | ---------

The Company
did not pay or declare any dividends on ordinary shares in the years ended March 31, 2012, 2013, and 2014.



|13. | CASH AND CASH EQUIVALENTS / TERM DEPOSITS
|--- | -----------------------------------------

Cash and cash equivalents of the Group are mainly denominated in RMB and US$. The cash balances carried an average interest rate of 1.20%, 1.06% and 1.06% per annum as of March 31, 2012, 2013
and 2014, respectively.

Term deposits had an average interest rate of 3.30%, 3.12% and 3.84% per annum at March 31,
2012, 2013 and 2014, respectively.



|14. | SHORT-TERM INVESTMENTS
|--- | ----------------------

Short-term investments consist primarily of a financial product purchased from a Chinese bank. The maturity of the financial product is
one year, with an interest rate of 5.3%. It is classified as short-term investments on the consolidated statements of financial position as its contractual maturity date is equal to one year. The repayment of the financial product and its return is
guaranteed by the Chinese bank from which the fixed-income financial product was purchased. The Company has received the principal and interest in full upon maturity in April 2014.



F-30



---

##### Table of Contents

The Company estimated that their fair value as of March 31, 2014 approximate their
amortized costs considering their short term maturities and high credit quality.



|15. | INVESTMENT AT FVTPL
|--- | -------------------

In
January and March 2014, the Group totally invested RMB165,000,000 in a monetary fund with the underlying investments in government bonds, structure deposits and bank notes. The fair value of the monetary fund varies depending on the interest rates
and credit risks of the underlying investments. As of March 31, 2014, the fair value of such monetary fund was RMB166,073,000. Gains from investment in monetary fund recognized in the consolidated statement of profit or loss and other
comprehensive income for the year ended March 31, 2014 were RMB1,073,000. The investment was classified as financial assets at FVTPL upon initial recognition.



|16. | AVAILABLE-FOR-SALE INVESTMENTS
|--- | ------------------------------

The Groups AFS financial assets are equity investments in two unlisted companies, established in the PRC, with 5% (RMB800,000) and 1% (RMB100,000) interests in them, respectively, as of
March 31, 2012, 2013 and 2014; and an investment in a limited partnership of venture capital fund with investment amount of RMB6,267,000 (US$1,000,000) and RMB6,150,000 (US$1,000,000) respectively, as of March 31, 2013 and 2014.

During the year ended March 31, 2014, the Group recognized an impairment of RMB800,000 in respect of its 5% interest in
one of the two unlisted companies, due to its poor business performance and negative discounted cash flow forecast.



|17. | TRADE AND OTHER RECEIVABLES
|--- | ---------------------------



|                               |  |              |         |  |         |  |        |         |  |  |        | 
|------------------------------ |  | ------------ | ------- |  | ------- |  | ------ | ------- |  |  | ------ | 
|                               |  | At March 31, |        
|                               |  | 2012         |         |  | 2013    |  |        | 2014    | 
|                               |  | RMB000      |         |  | RMB000 |  |        | RMB000 | 
|Trade receivables              |  |              | 88,838  |  |         |  | 65,024 |         |  |  | 60,971 | 
|Deposits and other receivables |  |              | 6,609   |  |         |  | 9,406  |         |  |  | 23,779 | 
|Prepayments                    |  |              | 7,925   |  |         |  | 5,844  |         |  |  | 10,749 | 
|                               |  |              |         |  |         |  |        |         |  |  |        | 
|Total                          |  |              | 103,372 |  |         |  | 80,274 |         |  |  | 95,499 | 
|                               |  |              |         |  |         |  |        |         |  |  |        | 

The Group normally grants credit for an average period of 90 days to its mobile service providers
and mobile network operators.

Aging of trade receivables which are past due but not impaired:



|              |  |              |       |  |         |  |       |         |  |  |       | 
|------------- |  | ------------ | ----- |  | ------- |  | ----- | ------- |  |  | ----- | 
|              |  | At March 31, |      
|              |  | 2012         |       |  | 2013    |  |       | 2014    | 
|              |  | RMB000      |       |  | RMB000 |  |       | RMB000 | 
|91  120 days |  |              | 1,910 |  |         |  | 4,996 |         |  |  | 2,294 | 
|              |  |              |       |  |         |  |       |         |  |  |       | 

The Group has not recognized an allowance for doubtful receivables because there has not been a
significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral or other credit enhancements over these balances. The Group wrote off RMB2,361,000, RMB3,693,000 and Nil trade and other
receivables during the year ended March 31, 2012, 2013 and 2014, respectively, due to mobile network operators unilaterally terminating services provided by certain mobile service providers. The Group does not believe such termination of
services provided by mobile service providers is foreseeable.

RMB 541,000 of trade and other receivables written off in the
prior periods was collected and recorded in general and administration expenses during the year ended March 31, 2014.



F-31



---

##### Table of Contents

|18. | PROPERTY AND EQUIPMENT
|--- | ----------------------



|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|----------------------------- |  | ------------------- | ------- | - | --------- |  | ------ | --------------- |  |  | --------------------- | - |  | ------------- | ------ | - | ------- |  | ---- | - |  |  | ------- | -
|                              |  | Electronicequipment |         |   | Furniture |  |        | Officeequipment |  |  | Leaseholdimprovements |   |  | Motorvehicles |        |   | Total   | 
|                              |  | RMB000             |         |   | RMB000   |  |        | RMB000         |  |  | RMB000               |   |  | RMB000       |        |   | RMB000 | 
|Cost:                         |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At April 1, 2011              |  |                     | 53,747  |   |           |  | 1,938  |                 |  |  | 652                   |   |  |               | 4,507  |   |         |  | 876  |   |  |  | 61,720  |  
|Additions                     |  |                     | 10,809  |   |           |  |       |                 |  |  | 37                    |   |  |               |       |   |         |  |     |   |  |  | 10,846  |  
|Derecognition of a subsidiary |  |                     | (148    | ) |           |  | (42    | )               |  |  |                      |   |  |               |       |   |         |  |     |   |  |  | (190    | )
|Disposals                     |  |                     | (341    | ) |           |  |       |                 |  |  | (7                    | ) |  |               |       |   |         |  |     |   |  |  | (348    | )
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2012             |  |                     | 64,067  |   |           |  | 1,896  |                 |  |  | 682                   |   |  |               | 4,507  |   |         |  | 876  |   |  |  | 72,028  |  
|Additions                     |  |                     | 3,833   |   |           |  | 39     |                 |  |  | 146                   |   |  |               | 39     |   |         |  |     |   |  |  | 4,057   |  
|Disposals                     |  |                     | (1,107  | ) |           |  | (48    | )               |  |  | (26                   | ) |  |               |       |   |         |  |     |   |  |  | (1,181  | )
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2013             |  |                     | 66,793  |   |           |  | 1,887  |                 |  |  | 802                   |   |  |               | 4,546  |   |         |  | 876  |   |  |  | 74,904  |  
|Additions                     |  |                     | 1,351   |   |           |  | 18     |                 |  |  | 39                    |   |  |               | 145    |   |         |  |     |   |  |  | 1,553   |  
|Disposals                     |  |                     | (1,099  | ) |           |  |       |                 |  |  | (10                   | ) |  |               | (419   | ) |         |  |     |   |  |  | (1,528  | )
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2014             |  |                     | 67,045  |   |           |  | 1,905  |                 |  |  | 831                   |   |  |               | 4,272  |   |         |  | 876  |   |  |  | 74,929  |  
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|                              |  |                     |         |   |           | 
|Depreciation:                 |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2011             |  |                     | (16,141 | ) |           |  | (337   | )               |  |  | (261                  | ) |  |               | (1,457 | ) |         |  | (239 | ) |  |  | (18,435 | )
|Charge for the year           |  |                     | (18,833 | ) |           |  | (379   | )               |  |  | (203                  | ) |  |               | (1,492 | ) |         |  | (175 | ) |  |  | (21,082 | )
|Derecognition of a subsidiary |  |                     | 33      |   |           |  | 4      |                 |  |  |                      |   |  |               |       |   |         |  |     |   |  |  | 37      |  
|Eliminated on disposals       |  |                     | 301     |   |           |  |       |                 |  |  | 7                     |   |  |               |       |   |         |  |     |   |  |  | 308     |  
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2012             |  |                     | (34,640 | ) |           |  | (712   | )               |  |  | (457                  | ) |  |               | (2,949 | ) |         |  | (414 | ) |  |  | (39,172 | )
|Charge for the year           |  |                     | (19,386 | ) |           |  | (376   | )               |  |  | (199                  | ) |  |               | (1,460 | ) |         |  | (175 | ) |  |  | (21,596 | )
|Eliminated on disposals       |  |                     | 994     |   |           |  | 18     |                 |  |  | 22                    |   |  |               |       |   |         |  |     |   |  |  | 1,034   |  
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2013             |  |                     | (53,032 | ) |           |  | (1,070 | )               |  |  | (634                  | ) |  |               | (4,409 | ) |         |  | (589 | ) |  |  | (59,734 | )
|Charge for the year           |  |                     | (7,883  | ) |           |  | (366   | )               |  |  | (72                   | ) |  |               | (171   | ) |         |  | (162 | ) |  |  | (8,654  | )
|Eliminated on disposals       |  |                     | 637     |   |           |  |       |                 |  |  | 8                     |   |  |               | 419    |   |         |  |     |   |  |  | 1,064   |  
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2014             |  |                     | (60,278 | ) |           |  | (1,436 | )               |  |  | (698                  | ) |  |               | (4,161 | ) |         |  | (751 | ) |  |  | (67,324 | )
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|                              |  |                     |         |   |           | 
|Carrying values               |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2012             |  |                     | 29,427  |   |           |  | 1,184  |                 |  |  | 225                   |   |  |               | 1,558  |   |         |  | 462  |   |  |  | 32,856  |  
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2013             |  |                     | 13,761  |   |           |  | 817    |                 |  |  | 168                   |   |  |               | 137    |   |         |  | 287  |   |  |  | 15,170  |  
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  
|At March 31, 2014             |  |                     | 6,767   |   |           |  | 469    |                 |  |  | 133                   |   |  |               | 111    |   |         |  | 125  |   |  |  | 7,605   |  
|                              |  |                     |         |   |           |  |        |                 |  |  |                       |   |  |               |        |   |         |  |      |   |  |  |         |  



|19. | INTEREST IN ASSOCIATES
|--- | ----------------------



|                                             |  |              |        |   |         |  |        |         |  |  |         |  
|-------------------------------------------- |  | ------------ | ------ | - | ------- |  | ------ | ------- |  |  | ------- | -
|                                             |  | At March 31, |       
|                                             |  | 2012         |        |   | 2013    |  |        | 2014    | 
|                                             |  | RMB000      |        |   | RMB000 |  |        | RMB000 | 
|Cumulative cost of investments in associates |  |              | 14,710 |   |         |  | 38,669 |         |  |  | 61,211  |  
|Cumulative share of results of associates    |  |              | (8,236 | ) |         |  | (9,171 | )       |  |  | (12,018 | )
|Impairment of investment in associates (i)   |  |              | (5,760 | ) |         |  | (7,127 | )       |  |  | (7,854  | )
|                                             |  |              |        |   |         |  |        |         |  |  |         |  
|                                             |  |              | 714    |   |         |  | 22,371 |         |  |  | 41,339  |  
|                                             |  |              |        |   |         |  |        |         |  |  |         |  



F-32



---

##### Table of Contents

|(i) | The Group recognized impairment of RMB1,367,000 in respect of its investment in Beijing DigiMobi Studio Co., Ltd. (DigiMobi) during the year ended
March 31, 2013 and impairment of RMB727,000 in respect of its investment in Beijing Dream Sky Technology Co. Ltd., (Dream Sky) during the year ended March 31, 2014, respectively, due to the poor business performance and
negative discounted cash flow forecast of the two investees. The investment in DigiMobi and Dream Sky have then been fully impaired.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Particulars of the Groups investments in associates are as follows:



|                                                         |  |                         |            |  |                                               |  |     |                      |  |  |      |   |  |  |      |   |  |                                                         
|-------------------------------------------------------- |  | ----------------------- | ---------- |  | --------------------------------------------- |  | --- | -------------------- |  |  | ---- | - |  |  | ---- | - |  | --------------------------------------------------------
|                                                         |  | Issuedandpaid upcapital |            |  | Portion ofregistered capitalheld by the Group |  |     | Principal activities
|                                                         |  |                         | March 31,  |  |                                              
|Name of associates                                       |  | RMB                     |            |  | 2012                                          |  |     | 2013                 |  |  | 2014 |   | 
|                                                         |  |                         |            |  | %                                             |  |     | %                    |  |  | %    |   |  | 
|Zhang Xing Wu Xian Technologies (Beijing) Co., Ltd. (a)  |  |                         | 500,000    |  |                                               |  | 37  | %                    |  |  | 37   | % |  |  | 37   | % |  | Mobile application and content provider                 
|Hangzhou Sibi Technologies Co., Ltd. (b)                 |  |                         | 300,000    |  |                                               |  | 33  | %                    |  |  | 33   | % |  |  | 33   | % |  | Mobile application and content provider                 
|Guanzhun (c)                                             |  |                         | 15,000,000 |  |                                               |  | 45  | %                    |  |  | 45   | % |  |  | 45   | % |  | Development of mobile application software              
|Shenzhen Heisha Technologies Co., Ltd. (d)               |  |                         | 11,445,878 |  |                                               |  | 31  | %                    |  |  | 31   | % |  |  | 31   | % |  | Provision of mobile application service                 
|Beijing Brtech Co., Ltd. (e)                             |  |                         | 1,176,500  |  |                                               |  | Nil |                      |  |  | 15   | % |  |  | 15   | % |  | Development of mobile application software              
|Shanghai Mihoyo Network Technology Co., Ltd. (f)         |  |                         | 1,070,000  |  |                                               |  | Nil |                      |  |  | 15   | % |  |  | 15   | % |  | Development of mobile application software              
|Shanghai Fangcun Information Technology Co., Ltd. (g)    |  |                         | 10,000,000 |  |                                               |  | Nil |                      |  |  | 20   | % |  |  | 37.9 | % |  | Development of mobile application software              
|DigiMobi (h)                                             |  |                         | 117,647    |  |                                               |  | Nil |                      |  |  | 15   | % |  |  | 15   | % |  | Development of mobile application software              
|Shanghai Gameba Co., Ltd. (i)                            |  |                         | 375,000    |  |                                               |  | Nil |                      |  |  | 15   | % |  |  | 20   | % |  | Development of mobile application software              
|Hangzhou Mr. Glee Tech. Co., Ltd. (j)                    |  |                         | 1,430,600  |  |                                               |  | Nil |                      |  |  | 10   | % |  |  | 10   | % |  | Development of mobile application software              
|Dream Sky (k)                                            |  |                         | 125,000    |  |                                               |  | Nil |                      |  |  | 20   | % |  |  | 20   | % |  | Development of mobile application software              
|Hangzhou Taiku Technologies Co., Ltd. (l)                |  |                         | 8,500,000  |  |                                               |  | Nil |                      |  |  | 65   | % |  |  | 65   | % |  | Operation of mobile video services                      
|Hangzhou Breaking Dawn Network Technologies Co. Ltd. (m) |  |                         | 10,000,000 |  |                                               |  | Nil |                      |  |  | 70   | % |  |  | 70   | % |  | Operation of mobile leisure games                       
|Hangzhou Quyuan Technologies Co., Ltd. (n)               |  |                         | 1,000,000  |  |                                               |  | Nil |                      |  |  | Nil  |   |  |  | 20   | % |  | Development of mobile application software              
|Hangzhou Lonshin E-Commerce Co., Ltd. (o)                |  |                         | 1,111,111  |  |                                               |  | Nil |                      |  |  | Nil  |   |  |  | 10   | % |  | Operation of car service platform                       
|Shanghai Mingyou Network Technologies Co., Ltd. (p)      |  |                         | 1,250,000  |  |                                               |  | Nil |                      |  |  | Nil  |   |  |  | 13.3 | % |  | Development of mobile application software              
|Hangzhou Qianlong Technologies Co., Ltd. (q)             |  |                         | 10,000,000 |  |                                               |  | Nil |                      |  |  | Nil  |   |  |  | 40   | % |  | Development of mobile application software              
|Shanghai Vtime Information Technologies Co., Ltd. (r)    |  |                         | 133,334    |  |                                               |  | Nil |                      |  |  | Nil  |   |  |  | 12.5 | % |  | Operation of mobile game advertising platform           
|Shanghai Halfmeters Network Technologies Co., Ltd. (s)   |  |                         | 133,300    |  |                                               |  | Nil |                      |  |  | Nil  |   |  |  | 12.5 | % |  | Development of mobile application software              
|Guangzhou Eyesblack Network Technologies Co., Ltd. (t)   |  |                         | 125,000    |  |                                               |  | Nil |                      |  |  | Nil  |   |  |  | 20   | % |  | Development of mobile application software              
|Hangzhou Joyreach Technologies Co., Ltd. (u)             |  |                         | 1,136,364  |  |                                               |  | Nil |                      |  |  | Nil  |   |  |  | 12   | % |  | Operation and Development of mobile application software

All of the above associates are accounted for using the equity method in the consolidated financial
statements.



F-33



---

##### Table of Contents

The financial year end date of all of the above associates is December 31. This was the
reporting date as required by the Company Law of PRC. For the purposes of applying the equity method of accounting, the financial statements of the above associates for the years ended December 31, 2011, 2012 and 2013 have been used, and
appropriate adjustments have been made for the effects of significant transactions between those dates and March 31, 2012, 2013 and 2014.



|(a) | In March 2009, the Group acquired 37% of the equity interest in Zhang Xing Wu Xian Technologies (Beijing) Co. Ltd for cash consideration of RMB500,000.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | In February 2009, Mijia, together with another two individuals independent from the entities within the Group, established Hangzhou Sibi Technologies Co., Ltd
(Sibi). Mijia invested RMB100,000 and obtained a 33.3% equity interest in Sibi.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | In September 2009, Sky, together with the holder of the convertible redeemable preferred shares and a group of individuals independent from the entities within the
Group, established Guanzhun. Sky contributed RMB12,510,000 and obtained a 45% equity interest in Guanzhun.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | The Group held 65% interest of Shenzhen Heisha Technologies Co., Ltd. (Heisha) and consolidated it before April 2011. In April 2011, the Group partially
disposed its interests in Heisha and retained 31% equity interest, the fair value of the remaining 31% interest of Heisha was approximately RMB 1,600,000 (Note 24).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | In April 2012, Sky Investment acquired 15% of the equity interest in Beijing Brtech Co., Ltd. (Brtech) for a cash consideration of RMB2,200,000. One out of
three directors of Brtech is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Brtech, therefore, Brtech is considered as an associate.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | In June 2012, Sky Investment acquired 15% of the equity interest in Shanghai Mihoyo Network Technology Co., Ltd. (Mihoyo) for a cash consideration of
RMB1,000,000. One out of three directors of Mihoyo is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Mihoyo, therefore, Mihoyo is considered as an associate.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) | In July 2012, Sky Investment acquired 12% of the equity interest in Shanghai Fangcun Information Technology Co., Ltd. (Fangcun) for a cash consideration of
RMB2,500,000. In March 2013, Sky Investment further invested RMB2,500,000 and obtained 8% equity interest in Fangcun. In July 2013, Sky Investment sold 20% equity interest in Fangcun to Miyi through a inter-group transfer. In July 2013, Najia
further acquired 17.9% of the equity interest in Fangcun for a cash consideration of RMB 25,000,000. After that, Miyi and Najia held 20% and 17.9% of the equity interest in Fangcun, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

One out of three directors is appointed by the Group and the Group can exercise significant influence over the financial and operational
policies of Fangcun, therefore, Fangcun is considered as an associate.

In late 2013, the Group and other shareholders of
Fangcun signed the share transfer agreement with Guangdong Alpha Animation & Culture Co., Ltd. (Alpha) and planned to sell 100% shares of Fangcun to Alpha at the consideration of approximately RMB250,000,000. The deal was
approved by China Securities Regulatory Commission (CSRC) in February 2014, investment in Fangcun was reclassified as asset held-for-sale after that. This transaction was completed in May 2014 and all the cash consideration of
RMB91,625,000 was received.



|(h) | In July 2012, Sky Investment acquired 15% of the equity interest in DigiMobi for a cash consideration of RMB1,500,000. One out of three directors of DigiMobi is
appointed by the Group and the Group can exercise significant influence over the financial and operational policies of DigiMobi, therefore, DigiMobi is considered as an associate.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(i) | In October 2012, Sky Investment acquired 15% of the equity interest in Shanghai Gameba Co., Ltd. (Gameba) for a cash consideration of RMB1,125,000. One out
of three directors of Gameba is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Gameba, therefore, Gameba is considered as an associate. In December 2013, Sky Investment acquired
5% of the equity interest in Gameba from another investor for a cash consideration of RMB407,500. After that, Sky Investment held 20% of the equity interest in Gmeba.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(j) | In October 2012, Sky Investment acquired 10% of the equity interest in Hangzhou Mr. Glee Tech. Co., Ltd. (Mr. Glee) for a cash consideration of
RMB5,000,000. One out of three directors of Mr. Glee is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Mr. Glee, therefore, Mr. Glee is considered as an
associate.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(k) | In November 2012, Sky Investment acquired 20% of the equity interest in Beijing Dream Sky Technology Ltd. for a cash consideration of RMB1,000,000.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------



F-34



---

##### Table of Contents

|(l) | In January 2013. Sky, together with another two independent individuals, established Hangzhou Taiku Technologies Co., Ltd. (Taiku). Sky invested
RMB5,525,000 and obtained a 65% equity interest in Taiku. Only one out of three directors of Taiku is appointed by the Group, while a valid board resolution requires half of the total votes. The Group does not have the power to control or jointly
control the financial and operational policies of Taiku. Therefore, Taiku is considered as an associate.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(m) | In January 2013, Sky, together with another two independent individuals, established Hangzhou Breaking Dawn Network Technologies Co. Ltd. (Breaking Dawn).
Sky invested RMB1,610,000 and obtained a 70% equity interest in Breaking Dawn. Only one out of three directors of Breaking Dawn is appointed by the Group, while a valid board resolution requires half of the total votes. The Group does not have the
power to control or jointly control the financial and operational policies of Breaking Dawn. Therefore, Breaking Dawn is considered as an associate. In September 2013, Sky further invested RMB5,390,000 while the other shareholders increased their
investment proportionately.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(n) | In April 2013, Sky acquired 20% of the equity interest in Hangzhou Quyuan Technologies Co., Ltd. (Quyuan) for a cash consideration of RMB3,000,000.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(o) | In June 2013, Sky Investment acquired 10% of the equity interest in Hangzhou Lonshin E-Commerce Co., Ltd. (Lonshin) for a cash consideration of
RMB2,500,000. One out of three directors of Lonshin is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Lonshin, therefore, Lonshin is considered as an associate.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(p) | In August 2013, Sky Investment acquired 13.33% of the equity interest in Shanghai Mingyou Network Technologies Co., Ltd. (Mingyou) for a cash consideration
of RMB1,000,000. One out of three directors of Mingyou is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Mingyou, therefore, Mingyou is considered as an associate.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(q) | In July 2013, Sky acquired 40% of the equity interest in Hangzhou Qianlong Technologies Co., Ltd. (Qianlong) for a cash consideration of RMB2,600,000. In
September 2013, Sky further invested RMB1,400,000 while the other shareholders increased their investment proportionately.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(r) | In October 2013, Sky Investment acquired 12.5% of the equity interest in Shanghai Vtime Information Technologies Co., Ltd. (Vtime) for a cash consideration
of RMB750,000. One out of three directors of Vtime is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Vtime, therefore, Vtime is considered as an associate.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(s) | In October 2013, Sky Investment acquired 12.5% of the equity interest in Shanghai Halfmeters Network Technologies Co., Ltd. (Halfmeters) for a cash
consideration of RMB700,000. One out of three directors of Halfmeters is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Halfmeters, therefore, Halfmeters is considered as an
associate.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(t) | In January 2014, Miyi acquired 20% of the equity interest in Guangzhou Eyesblack Network Technologies Co., Ltd. (Eyesblack) for a cash consideration of
RMB1,500,000.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(u) | In March 2014, Miyi acquired 12% of the equity interest in Hangzhou Joyreach Technologies Co., Ltd. (Joyreach) for a cash consideration of RMB8,295,000. One
out of four directors of Joyreach is appointed by the Group and the Group can exercise significant influence over the financial and operational policies of Joyreach, therefore, Joyreach is considered as an associate.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A summary of financial information in respect of the Groups associates is set out below:



|                                                                       |  |              |        |  |         |  |        |         |  |  |        | 
|---------------------------------------------------------------------- |  | ------------ | ------ |  | ------- |  | ------ | ------- |  |  | ------ | 
|                                                                       |  | At March 31, |       
|                                                                       |  | 2012         |        |  | 2013    |  |        | 2014    | 
|                                                                       |  | RMB000      |        |  | RMB000 |  |        | RMB000 | 
|Total assets                                                           |  |              | 17,208 |  |         |  | 36,872 |         |  |  | 58,982 | 
|Total liabilities                                                      |  |              | 13,918 |  |         |  | 12,072 |         |  |  | 14,865 | 
|                                                                       |  |              |        |  |         |  |        |         |  |  |        | 
|Net assets                                                             |  |              | 3,290  |  |         |  | 24,800 |         |  |  | 44,117 | 
|                                                                       |  |              |        |  |         |  |        |         |  |  |        | 
|Aggregate carrying amount of the Groups interests in these associates |  |              | 714    |  |         |  | 22,371 |         |  |  | 41,339 | 
|                                                                       |  |              |        |  |         |  |        |         |  |  |        | 



|                                             |  |                       |        |   |         |  |         |         |  |  |        | 
|-------------------------------------------- |  | --------------------- | ------ | - | ------- |  | ------- | ------- |  |  | ------ | 
|                                             |  | Years Ended March 31, |       
|                                             |  | 2012                  |        |   | 2013    |  |         | 2014    | 
|                                             |  | RMB000               |        |   | RMB000 |  |         | RMB000 | 
|Total revenue                                |  |                       | 14,869 |   |         |  | 16,198  |         |  |  | 96,155 | 
|Profit (loss) for the year                   |  |                       | (7,760 | ) |         |  | (14,306 | )       |  |  | 14,206 | 
|Groups share of profit (loss) of associates |  |                       | (886   | ) |         |  | (935    | )       |  |  | 2,428  | 



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##### Table of Contents

|20. | TRADE AND OTHER PAYABLES
|--- | ------------------------



|                                                  |  |              |         |  |         |  |         |         |  |  |         | 
|------------------------------------------------- |  | ------------ | ------- |  | ------- |  | ------- | ------- |  |  | ------- | 
|                                                  |  | At March 31, |        
|                                                  |  | 2012         |         |  | 2013    |  |         | 2014    | 
|                                                  |  | RMB000      |         |  | RMB000 |  |         | RMB000 | 
|Trade payable                                     |  |              | 71,608  |  |         |  | 70,571  |         |  |  | 94,994  | 
|Accrued payroll and employee welfare              |  |              | 19,927  |  |         |  | 10,621  |         |  |  | 14,062  | 
|Other taxes payable                               |  |              | 6,239   |  |         |  | 6,420   |         |  |  | 5,145   | 
|Payable for acquisition of property and equipment |  |              | 398     |  |         |  | 1,031   |         |  |  | 565     | 
|Accrued expenses                                  |  |              | 6,793   |  |         |  | 6,511   |         |  |  | 5,551   | 
|Advance from customers                            |  |              | 12,939  |  |         |  | 20,332  |         |  |  | 22,225  | 
|Other payables                                    |  |              | 4,028   |  |         |  | 6,633   |         |  |  | 10,932  | 
|                                                  |  |              |         |  |         |  |         |         |  |  |         | 
|Total                                             |  |              | 121,932 |  |         |  | 122,119 |         |  |  | 153,474 | 
|                                                  |  |              |         |  |         |  |         |         |  |  |         | 



|21. | SHARE CAPITAL
|--- | -------------



|                                          |  |                 |              |       |        |  |        |         |  |  |     |  
|----------------------------------------- |  | --------------- | ------------ | ----- | ------ |  | ------ | ------- |  |  | --- | -
|                                          |  | Number ofshares |              |       | Amount |  |        | Amount  | 
|                                          |  |                 |              |       | US$    |  |        | RMB000 | 
|Common shares                             |  |                 |              |       |        |  |        |         |  |  |     |  
|Authorized:                               |  |                 |              |       |        |  |        |         |  |  |     |  
|As of March 31, 2011, 2012, 2013 and 2014 |  |                 | 937,857,200  |       |        |  | 46,893 |         |  |  | 338 |  
|                                          |  |                 |              |       |        |  |        |         |  |  |     |  
|Issued and fully paid:                    |  |                 |              |       |        |  |        |         |  |  |     |  
|At March 31, 2011 (of US$0.00005 each)    |  |                 | 257,389,800  |       |        |  | 12,869 |         |  |  | 92  |  
|Exercise of share options                 |  |                 | 784,800      | (i)   |        |  | 39     |         |  |  |    |  
|                                          |  |                 |              |       |        |  |        |         |  |  |     |  
|At March 31, 2012 (of US$0.00005 each)    |  |                 | 258,174,600  |       |        |  | 12,908 |         |  |  | 92  |  
|Exercise of share options                 |  |                 | 732,248      | (ii)  |        |  | 37     |         |  |  |    |  
|Restricted share vested                   |  |                 | 697,916      | (ii)  |        |  | 35     |         |  |  |    |  
|Cancellation of repurchased shares        |  |                 | (9,192,816)  | (iii) |        |  | (460   | )       |  |  | (3  | )
|                                          |  |                 |              |       |        |  |        |         |  |  |     |  
|At March 31, 2013 (of US$0.00005 each)    |  |                 | 250,411,948  |       |        |  | 12,520 |         |  |  | 89  |  
|Exercise of share options                 |  |                 | 4,456,776    | (iv)  |        |  | 223    |         |  |  | 2   |  
|Restricted share vested                   |  |                 | 549,146      | (iv)  |        |  | 27     |         |  |  |    |  
|Cancellation of repurchased shares        |  |                 | (15,955,984) | (v)   |        |  | (798   | )       |  |  | (5  | )
|                                          |  |                 |              |       |        |  |        |         |  |  |     |  
|At March 31, 2014 (of US$0.00005 each)    |  |                 | 239,461,886  |       |        |  | 11,972 |         |  |  | 86  |  
|                                          |  |                 |              |       |        |  |        |         |  |  |     |  



|(i) | In March 2012, 784,800 fully vested options were exercised and converted into 784,800 common shares with a par value of US$0.00005 per share. The RMB1,284,000 exercise
price which was not received by the end of March 31, 2012 was recorded as a subscription receivable. Such amount was received during the year ended March 31, 2013.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | During the year ended March 31, 2013, 732,248 fully vested options were exercised and converted into 732,248 common shares with a par value of US$0.00005 per
share, and 697,916 fully vested restricted shares became unrestricted with a par value of US$0.00005 per share.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) | On August 12, 2012, the Board of Directors authorized the Company to repurchase up to US$10 million of its common shares on the open market during the period from
August 13, 2012 to August 12, 2013. As of March 31, 2013, the Company has repurchased 15,173,920 common shares for a total consideration of RMB25,308,000 (US$4,086,010). And the Company cancelled 9,192,816 common shares which were
repurchased during the year ended March 31, 2013. The remaining 5,981,104 common shares repurchased was cancelled during the year ended March 31 2014.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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---

##### Table of Contents

|(iv) | During the year ended March 31, 2014, 4,456,776 fully vested options were exercised and converted into 4,456,776 common shares with a par value of US$0.00005 per
share, and 549,146 fully vested restricted shares became unrestricted with a par value of US$0.00005 per share.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(v) | During the year ended March 31, 2014, the Company repurchased 12,288,720 common shares for a total consideration of RMB27,361,000 (US$4,452,086) and cancelled
15,955,984 repurchased common shares. The remaining 2,313,840 common shares repurchased are still not yet cancelled as at March 31, 2014.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|22. | SHARE-BASED PAYMENTS
|--- | --------------------

Employee Share Option Plan (the Plan)

On March 1, 2010, the Company approved an ownership-based compensation scheme for executives and senior employees under which the Company could grant up to 15,000,000 options to purchase its shares.
In accordance with the terms of the Plan, executives and senior employees may be granted options to purchase common shares at an exercise price approved by the shareholders that should be no less than US$0.07 per common share of the Company. The
option holders are not entitled to dividends nor do they have voting rights. The number of options granted is calculated and approved by shareholders. Options have a life of 10 years from the date of grant.

A summary of the option activity is as follows:



|                              |  |                   |            |   |                                  |  |       |                                             |  |  |           | 
|----------------------------- |  | ----------------- | ---------- | - | -------------------------------- |  | ----- | ------------------------------------------- |  |  | --------- | 
|                              |  | Number of
options |            |   | Weighted average exercise prices |  |       | Weighted average remaining
contractual Life | 
|                              |  |                   |            |   | RMB                              |  |       |                                             | 
|Outstanding on April 1, 2011  |  |                   | 11,271,050 |   |                                  |  | 1.865 |                                             |  |  |           | 
|Forfeited                     |  |                   | (1,964,600 | ) |                                  |  | 1.775 |                                             |  |  |           | 
|Exercised                     |  |                   | (784,800   | ) |                                  |  | 1.775 |                                             |  |  |           | 
|                              |  |                   |            |   |                                  |  |       |                                             |  |  |           | 
|Outstanding on March 31, 2012 |  |                   | 8,521,650  |   |                                  |  | 1.907 |                                             |  |  | 5.5 years | 
|Forfeited                     |  |                   | (1,101,967 | ) |                                  |  | 1.775 |                                             |  |  |           | 
|Exercised                     |  |                   | (732,248   | ) |                                  |  | 1.775 |                                             |  |  |           | 
|                              |  |                   |            |   |                                  |  |       |                                             |  |  |           | 
|Outstanding on March 31, 2013 |  |                   | 6,687,435  |   |                                  |  | 1.993 |                                             |  |  | 4.1 years | 
|Forfeited                     |  |                   | (189,881   | ) |                                  |  | 4.289 |                                             |  |  |           | 
|Exercised                     |  |                   | (4,456,776 | ) |                                  |  | 1.775 |                                             |  |  |           | 
|                              |  |                   |            |   |                                  |  |       |                                             |  |  |           | 
|Outstanding on March 31, 2014 |  |                   | 2,040,778  |   |                                  |  | 2.009 |                                             |  |  | 3.3 years | 
|                              |  |                   |            |   |                                  |  |       |                                             |  |  |           | 

The Company recorded compensation expense of RMB22,853,000, RMB8,357,000 and RMB4,537,000 for the years
ended March 31, 2012, 2013 and 2014, respectively.

Options exercisable were 2,123,900, 3,385,035 and 1,600,728 as of
March 31, 2012, 2013 and 2014, respectively.

In respect of the share options exercised during the year ended
March 31, 2012, 2013 and 2014, the weighted average share price at the dates of exercise was RMB3.057, RMB 1.849 and RMB4.404 per share, respectively.

Restricted Shares

On April 1, 2010, Xplane
Ltd.(Xplane), the Companys parent company, issued 493,400 of its restricted shares to its shareholders, who are also employees of the Group. Of these shares, 40% vest on the second anniversary of the grant date and 20% vest on
the third, fourth and fifth anniversaries of the grant date, respectively. The Group measured the fair value of the restricted shares based on the fair value of the Companys shares, as Xplane has no other assets except for its investment in
the Group. The fair value of the restricted shares as of April 1, 2010 was RMB126 (US$19) per share. The Group recognized the total amount of approximately RMB62,351,000 as compensation expense over the five year deemed service, or vesting,
period with a corresponding increase in reserve in the statement of changes in equity. During the years ended March 31, 2012, 2013 and 2014, the Group recognized RMB22,238,000, RMB9,768,000 and RMB5,612,000 as compensation expense,
respectively.



F-37



---

##### Table of Contents

On March 7, 2012, the Group issued 4,038,176 restricted shares to its employees. At the
same time, Xplane also granted 3,340,400 of Sky-mobis restricted shares to employees of the Group. The holders of these shares retain the voting and dividend rights of, but are restricted from selling, such non-vested restricted shares.
25% of the total 7,378,576 restricted shares vest on each anniversary of the grant date. The Group measured the fair value of the restricted shares based on the open market quote of the Companys shares, which was RMB2.88 (US$0.46). The Group
recognizes the total amount of RMB21,327,000 as compensation expense over the four year deemed service, or vesting, period with a corresponding increase in reserve in the consolidated statements of changes in equity. During the years ended
March 31, 2013 and 2014, the Group recognized RMB6,332,000 and RMB2,977,000, respectively, as compensation expense.

On
April 15, October 30 and November 18, 2013, the Company issued 100,000, 1,600,000 and 40,000 restricted shares to the Groups director and senior management. The holders of these shares retain the voting and dividend rights
of, but is restricted from selling, such non-vested restricted shares. These shares vest one-fourth or one-third on each anniversary of the grant date. The Group measured the fair value of the restricted shares based on the open market quote of the
Companys shares, which was RMB1.24 (US$0.20), RMB2.99 (US$0.49) and RMB2.61 (US$0.43), respectively. The Group will recognize the total amount of RMB5,008,000 as compensation expense over the deemed service years, or vesting period with a
corresponding increase in reserve in the consolidated statement of changes in equity. During the year ended March 31, 2014, the Group totally recognized RMB1,436,000 as compensation expense.

A summary of the restricted shares activity is as follows:



|                              |  |                             |            |  
|----------------------------- |  | --------------------------- | ---------- | -
|                              |  | Number of Restricted Shares |           
|                              |  |                             |            |  
|Outstanding on April 1, 2011  |  |                             |           |  
|Granted on March 7, 2012      |  |                             | 4,038,176  |  
|                              |  |                             |            |  
|Outstanding on March 31, 2012 |  |                             | 4,038,176  |  
|Forfeited                     |  |                             | (1,349,768 | )
|Vested                        |  |                             | (697,916   | )
|                              |  |                             |            |  
|Outstanding on March 31, 2013 |  |                             | 1,990,492  |  
|Granted on April 15, 2013     |  |                             | 100,000    |  
|Granted on October 30, 2013   |  |                             | 1,600,000  |  
|Granted on November 18, 2013  |  |                             | 40,000     |  
|Forfeited                     |  |                             | (354,920   | )
|Vested                        |  |                             | (549,146   | )
|                              |  |                             |            |  
|Outstanding on March 31, 2014 |  |                             | 2,826,426  |  
|                              |  |                             |            |  

Other Equity Compensation

As an incentive to the key management of Mopin, a subsidiary of the Group, the Group granted 12% equity interests of Mopin held by Sky-mobi to certain key management in June 2013, without requiring future
service. The Group measured the fair value of the shares of Mopin based on the net asset value as Mopin was newly set up in June 2013. The Group recognized RMB2,916,000 compensation expense immediately.



|23. | RELATED PARTY TRANSACTIONS
|--- | --------------------------

(a) Related party balances



|                                                        |  |              |     |  |         |  |     |         |  |  |     | 
|------------------------------------------------------- |  | ------------ | --- |  | ------- |  | --- | ------- |  |  | --- | 
|                                                        |  | At March 31, |    
|                                                        |  | 2012         |     |  | 2013    |  |     | 2014    | 
|                                                        |  | RMB000      |     |  | RMB000 |  |     | RMB000 | 
|Amounts due from related parties                        |  |              |     |  |         |  |     |         |  |  |     | 
|Non-trade balances                                      |  |              |     |  |         |  |     |         |  |  |     | 
|Amount due from associates                              |  |              |     |  |         |  |     |         |  |  |     | 
| Hangzhou TaiKu Technologies Co. Ltd.                  |  |              |    |  |         |  | 306 |         |  |  | 1   | 
| Hangzhou Breaking Dawn Network Technologies Co., Ltd. |  |              |    |  |         |  | 92  |         |  |  | 11  | 
|Amount due from a shareholder                           |  |              |     |  |         |  |     |         |  |  |     | 
| Xplane Ltd.                                           |  |              | 126 |  |         |  | 125 |         |  |  |    | 
|Trade balances                                          |  |              |     |  |         |  |     |         |  |  |     | 
|Amount due from an associate                            |  |              |     |  |         |  |     |         |  |  |     | 
| Hangzhou Qianlong Technologies Co., Ltd.              |  |              |    |  |         |  |    |         |  |  | 148 | 
|                                                        |  |              |     |  |         |  |     |         |  |  |     | 
|                                                        |  |              | 126 |  |         |  | 523 |         |  |  | 160 | 
|                                                        |  |              |     |  |         |  |     |         |  |  |     | 



F-38



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##### Table of Contents

The amounts due from related parties are unsecured, non-interest bearing and repayable on
demand.



|                                                        |  |              |     |  |         |  |       |         |  |  |        | 
|------------------------------------------------------- |  | ------------ | --- |  | ------- |  | ----- | ------- |  |  | ------ | 
|                                                        |  | At March 31, |    
|                                                        |  | 2012         |     |  | 2013    |  |       | 2014    | 
|                                                        |  | RMB000      |     |  | RMB000 |  |       | RMB000 | 
|Amounts due to related parties                          |  |              |     |  |         |  |       |         |  |  |        | 
|Trade balances                                          |  |              |     |  |         |  |       |         |  |  |        | 
|Amounts due to associates                               |  |              |     |  |         |  |       |         |  |  |        | 
| Zhang Xing Wu Xian Technologies (Beijing) Co., Ltd.   |  |              | 274 |  |         |  | 577   |         |  |  | 604    | 
| Hangzhou Sibi Technologies Co., Ltd.                  |  |              | 597 |  |         |  | 426   |         |  |  | 211    | 
| Beijing Brtech Co., Ltd.                              |  |              |    |  |         |  | 127   |         |  |  | 39     | 
| Hangzhou Breaking Dawn Network Technologies Co., Ltd. |  |              |    |  |         |  | 2,924 |         |  |  | 4,662  | 
| Hangzhou TaiKu Technologies Co., Ltd.                 |  |              |    |  |         |  |      |         |  |  | 587    | 
| Hangzhou Quyuan Technologies Co., Ltd.                |  |              |    |  |         |  |      |         |  |  | 875    | 
| Hangzhou Qianlong Technologies Co., Ltd.              |  |              |    |  |         |  |      |         |  |  | 188    | 
| Hangzhou Joyreach Technologies Co., Ltd.              |  |              |    |  |         |  |      |         |  |  | 4,035  | 
|                                                        |  |              |     |  |         |  |       |         |  |  |        | 
|                                                        |  |              | 871 |  |         |  | 4,054 |         |  |  | 11,201 | 
|                                                        |  |              |     |  |         |  |       |         |  |  |        | 

The amounts due to associates are trading in nature. The related party balances are unsecured,
non-interest bearing and repayable on demand.

(b) Related party transactions

During the years ended March 31, 2012, 2013 and 2014, respectively, significant related party transactions were as follows:



|                                                       |  |                       |       |  |         |  |       |         |  |  |        | 
|------------------------------------------------------ |  | --------------------- | ----- |  | ------- |  | ----- | ------- |  |  | ------ | 
|                                                       |  | Years Ended March 31, |      
|                                                       |  | 2012                  |       |  | 2013    |  |       | 2014    | 
|                                                       |  | RMB000               |       |  | RMB000 |  |       | RMB000 | 
|Cost of revenues (for content)                         |  |                       |       |  |         |  |       |         |  |  |        | 
|Associates                                             |  |                       |       |  |         |  |       |         |  |  |        | 
| Zhang Xing Wu Xian Technologies (Beijing) Co., Ltd.  |  |                       | 1,822 |  |         |  | 357   |         |  |  | 81     | 
| Hangzhou Sibi Technologies Co., Ltd.                 |  |                       | 3,724 |  |         |  | 2,271 |         |  |  | 1,545  | 
| Beijing Brtech Co., Ltd.                             |  |                       |      |  |         |  | 982   |         |  |  | 349    | 
| Hangzhou Breaking Dawn Network Technologies Co. Ltd. |  |                       |      |  |         |  | 2,924 |         |  |  | 12,137 | 
| Hangzhou TaiKu Technologies Co. Ltd.                 |  |                       |      |  |         |  |      |         |  |  | 1,178  | 
| Hangzhou Quyuan Technologies Co. Ltd.                |  |                       |      |  |         |  |      |         |  |  | 1,875  | 
| Hangzhou Qianlong Technologies Co. Ltd.              |  |                       |      |  |         |  |      |         |  |  | 7,288  | 
|                                                       |  |                       |       |  |         |  |       |         |  |  |        | 
|                                                       |  |                       | 5,546 |  |         |  | 6,534 |         |  |  | 24,453 | 
|                                                       |  |                       |       |  |         |  |       |         |  |  |        | 



|                                          |  |                       |   |  |         |  |   |         |  |  |       | 
|----------------------------------------- |  | --------------------- | - |  | ------- |  | - | ------- |  |  | ----- | 
|                                          |  | Years Ended March 31, |  
|                                          |  | 2012                  |   |  | 2013    |  |   | 2014    | 
|                                          |  | RMB000               |   |  | RMB000 |  |   | RMB000 | 
|Revenues                                  |  |                       |   |  |         |  |   |         |  |  |       | 
|An associate                              |  |                       |   |  |         |  |   |         |  |  |       | 
| Hangzhou Qianlong Technologies Co. Ltd. |  |                       |  |  |         |  |  |         |  |  | 2,830 | 
|                                          |  |                       |   |  |         |  |   |         |  |  |       | 



F-39



---

##### Table of Contents

Beijing Speedpay Technology Co., Ltd., in which the Companys director, Mr. Kui
Zhou, has significant influence over it, provides payment processing services to the Group. During the years ended March 31, 2012, 2013 and 2014, the Group paid a total of RMB1,373,000, RMB1,280,000 and RMB1,007,000, respectively, to Beijing
Speedpay Technology Co., Ltd.

(c) Key management compensation

The compensation of directors and other key management during the years was as follows:



|                                |  |                      |        |  |         |  |        |         |  |  |       | 
|------------------------------- |  | -------------------- | ------ |  | ------- |  | ------ | ------- |  |  | ----- | 
|                                |  | Year Ended March 31, |       
|                                |  | 2012                 |        |  | 2013    |  |        | 2014    | 
|                                |  | RMB000              |        |  | RMB000 |  |        | RMB000 | 
|Salary and other benefits       |  |                      | 6,548  |  |         |  | 6,152  |         |  |  | 3,669 | 
|Retirement benefit contribution |  |                      | 20     |  |         |  | 22     |         |  |  | 10    | 
|Share-based compensation        |  |                      | 18,472 |  |         |  | 8,393  |         |  |  | 2,212 | 
|                                |  |                      |        |  |         |  |        |         |  |  |       | 
|Total                           |  |                      | 25,040 |  |         |  | 14,567 |         |  |  | 5,891 | 
|                                |  |                      |        |  |         |  |        |         |  |  |       | 



|24. | DERECOGNITION AND PARTIAL DISPOSAL OF SUBSIDIARIES
|--- | --------------------------------------------------

In April 2011, the Group sold a 15% interest in Heisha, a 65% owned and consolidated subsidiary, to the minority shareholder of Heisha for RMB1,152,000. Further, Heisha issued additional preferred shares
to a third party partner, MediaTek Inc. (MTK), which further diluted the Groups ownership percentage to 31%. The Group lost control of Heisha as a result of these transactions. The net assets relating to Heisha derecognized upon
loss of control comprised of the following:



|                                                    |  |         |       |  
|--------------------------------------------------- |  | ------- | ----- | -
|                                                    |  | RMB000 |      
|Net Assets derecognized                             |  |         |       |  
|                                                    | 
|Cash and cash equivalents                           |  |         | 947   |  
|Trade and other receivables                         |  |         | 123   |  
|Property, plant and equipment                       |  |         | 153   |  
|Trade and other payables                            |  |         | (100  | )
|                                                    |  |         |       |  
|Net amount derecognized before capital injection    |  |         | 1,123 |  
|Capital injection by MTK                            |  |         | 6,446 |  
|                                                    |  |         |       |  
|Net amount derecognized including capital injection |  |         | 7,569 |  
|                                                    |  |         |       |  

The gain recognized in profit or loss upon deconsolidation of Heisha was calculated as follows:



|                                                             |  |         |        |  
|------------------------------------------------------------ |  | ------- | ------ | -
|                                                             |  | RMB000 |       
|                                                             | 
|Consideration received                                       |  |         | 1,152  |  
|Net assets derecognized                                      |  |         | (1,123 | )
|Non-controlling interest                                     |  |         | 301    |  
|Fair value of the retained interests classified as associate |  |         | 1,600  |  
|                                                             |  |         |        |  
|Gain on derecognition of Heisha                              |  |         | 1,930  |  
|                                                             |  |         |        |  



|                                            |  |         |       | 
|------------------------------------------- |  | ------- | ----- | 
|                                            |  | RMB000 |      
|Net Cash inflow arising on derecognition:   |  |         |       | 
|Cash consideration received                 |  |         | 1,152 | 
|Less: cash and cash equivalents disposed of |  |         | 947   | 
|                                            |  |         |       | 
|                                            |  |         | 205   | 
|                                            |  |         |       | 

The fair value of the residual interests of the Group in Heisha was calculated based on the price
invested in Heisha by MTK, using the backsolve method under the Option Pricing Model. The key assumption used in backsolve method included probability of scenarios, exercise values, expected time to liquidity, expected volatility, risk free interest
rate and discount for lack of marketability.



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##### Table of Contents

During the year ended March 31, 2013, the Group disposed 12.5% equity interest in Sky
Technologies International Limited (Sky Tech) for a cash consideration of RMB 2,001,000. After the sale, the Group still held 87.5% shares and retained control over Sky Tech. The transaction was accounted for as an equity transaction.
The carrying amounts of the Groups interests and the non-controlling interests were adjusted to reflect the changes in their relative interests in this subsidiary. The difference between the amount by which the non-controlling interests were
adjusted and the fair value of the consideration received was recognized directly in equity.



|25. | OPERATING LEASES
|--- | ----------------

The
Group has operating lease agreements principally for its office properties and servers in the PRC with lease terms between one to two years. These leases are renewable upon negotiation.

The Groups commitments for future minimum lease payments under non-cancelable operating lease agreements are as follows:



|                                        |  |              |        |  |         |  |        |         |  |  |        | 
|--------------------------------------- |  | ------------ | ------ |  | ------- |  | ------ | ------- |  |  | ------ | 
|                                        |  | At March 31, |       
|                                        |  | 2012         |        |  | 2013    |  |        | 2014    | 
|                                        |  | RMB000      |        |  | RMB000 |  |        | RMB000 | 
|Within one year                         |  |              | 8,211  |  |         |  | 15,849 |         |  |  | 9,767  | 
|In the second to fifth years, inclusive |  |              | 16,042 |  |         |  | 9,122  |         |  |  | 924    | 
|                                        |  |              |        |  |         |  |        |         |  |  |        | 
|Total                                   |  |              | 24,253 |  |         |  | 24,971 |         |  |  | 10,691 | 
|                                        |  |              |        |  |         |  |        |         |  |  |        | 



|26. | CAPITAL COMMITMENTS
|--- | -------------------

The
Groups commitments for capital injections contracted for but not provided in the consolidated financial statements in respect of investment in a limited partnership of venture capital fund is nil, RMB6,211,000, and RMB18,591,000 as of
March 31, 2012, 2013, and 2014, respectively.



|27. | PROFIT APPROPRIATION
|--- | --------------------

Pursuant to the relevant laws and regulations in the PRC applicable to foreign-investment corporations, the Groups PRC subsidiaries
are required to maintain a statutory reserve which is non-distributable. They are required to transfer 10% of their profit after taxation, as determined on a calendar year basis and in accordance with relevant accounting principles and financial
regulations applicable to enterprises established in the PRC (PRC GAAP), if any, to the statutory reserve until the balance reaches 50% of their registered capital. The amount of this statutory reserve is the same under both PRC GAAP and
IFRS and is reflected as statutory reserve in the consolidated statements of changes in equity. These reserves are not distributable as cash dividends. The difference between the net profit, as determined under PRC GAAP, and the amount allocated to
statutory reserve, for each of PRC subsidiaries represents amounts that are free of restriction. Such amounts differ from the amounts under IFRS due to accounting differences between PRC GAAP and IFRS.

At their discretion, the PRC subsidiaries may allocate a portion of their after-tax profits based on PRC accounting standards to staff
welfare and bonus funds. PRC regulations currently permit payment of dividends only out of the Groups PRC subsidiaries accumulated profits as determined in accordance with PRC accounting standards and regulations. The statutory reserve
amounted to 1,000,000, RMB1,000,000 and RMB1,000,000 as of March 31, 2012, 2013 and 2014, respectively. The Groups PRC subsidiaries have not allocated any of their after-tax profits to the staff welfare and bonus funds for any period
presented.

In addition, the registered capital of the Companys PRC subsidiaries of RMB102,542,000 as of March 31,
2014 was considered restricted due to restrictions on the distribution of registered share capital.

As a result of these PRC
laws and regulations, the Companys PRC subsidiaries are restricted in their ability to transfer a portion of their net assets, either in the form of dividends, loans or advances. Such restricted portion amounted to RMB108,042,000,
RMB112,734,000 and RMB111,618,000 as of March 31, 2012, 2013 and 2014, respectively.



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##### Table of Contents

|28. | SUBSEQUENT EVENT
|--- | ----------------

In May
2014, The Group completed the disposal of its entire 37.9% equity interest in Fangcun and received the cash consideration of RMB91,625,000 (note 19). The Group will recognize RMB56,351,000 capital gain accordingly.

In April 2014, the Group signed an investment agreement and committed to invest RMB 49.9 million for a 66.66% equity interest in
Shanghai Leyi Investment Fund Center (Leyi Fund) as a limited partner. The Group made the first payment of RMB 25 million in May 2014.



|29. | APPROVAL OF FINANCIAL STATEMENTS
|--- | --------------------------------

The financial statements were approved by the board of directors and authorized for issue on July 30, 2014.

* * * * *



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